Housing Construction Back to 1991 Levels

Housing construction continues to drop as an oversupply of houses keeps the builders on the sidelines.

PrivatehousingstartsHousing construction has dropped over the last two years as real estate sales have slowed. This makes sense since there is an oversupply of houses. The Department of Commerce reported yesterday that privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,091,000. This is 11.6 percent (±1.2%) above the revised May rate of 978,000, but is 23.9 percent (±1.3%) below the revised June 2007
estimate of 1,433,000.

Housing construction is a major part of the economy and a slowdown in this sector is thought to have reduced GDP between one-half to one percent.

It's also hurt some of the popular housing stocks. Toll Brothers, one of the nation's biggest builders, is down from its high of 55 in July 2005 and now trades at 19. Home Depot has also taken a tumble and is trading at half of its 52-week high.


Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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