The Commerce Department reported(.pdf) that new home construction tumbled in May following the expiration of the homebuyer tax credit in April, a development that surprised many forecasters for some reason. A look over at the Economic Calender at Yahoo! Finance shows that analysts missed these two by a country mile.
After an increase of 3.9 percent in April, housing starts fell 10.0 percent in May to an annual rate of 593,000 units, the lowest level since last December just after the first round of tax credits expired and well short of the expected 650,000+ units. Permits for new construction, an important leading indicator for the industry, fell 5.9 percent in May following an 11.0 percent plunge in April as homebuilders correctly anticipated the coming slowdown.
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Looks like a big “L” to me… Don’t we have enough houses? Every generation building its own house (and paying a new mortgage) is so 20th century. My family set up in Massachusetts in 1638. They built a house and the next 13 generations lived in the same house. Might we go back to that sensible arrangement?