As we’ve long been saying, negative seasonal trends appear to be taking a firm grasp on the housing market. Housing starts this morning were downright abysmal. Starts fell 10.6% in October and over 30% year over year. Econoday has the details:
October’s 0.529 million unit pace of new home groundbreaking came in much lower than the consensus forecast for 0.600 million unit and was down 30.7 percent on a year-ago basis. The decline was led by a 34.6 percent plunge in multifamily starts but the single-family component also slipped-by 6.8 percent.
By region, the October drop in starts was led by an 18.8 percent fall in the Northeast. Other Census regions also declined: the Midwest, down 10.6 percent; the South, down 9.6; and the West, down 8.5 percent.
Nonetheless, data going forward could show some signs of improvement as builders plan in advance of the extension of the homebuyers tax credit. October’s dip could have been due to a cautious approach as the tax credit looked at risk of expiring. It looks like lumber futures might have gotten a bit ahead of themselves in the last few sessions as the commodity craze begins to spiral out of Bernanke’s control.
Investors immediately sold the data, but have since come back into the water as the data appears to be a potential one time event. I fear it is not and that the housing data will remain quite weak until next spring when the spring buying season begins and investors begin to take advantage of the expiring tax credit once again.