Contractor Update

The housing market reports are out: housing bubble - "Sales of new one-family houses in December 2006 were at a seasonally adjusted annual rate of 1,120,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.0 percent below the December 2005 estimate of 1,259,000."

"The seasonally adjusted estimate of new houses for sale at the end of December was 537,000. An estimated 1,061,000 new homes were sold in 2006. This is 17.3 percent below the 2005 figure of 1,283,000.

Also, this sobering report - "Last year's plunge in new home sales was the biggest drop since a 17.8 percent drop since the recession year of 1990. Sales of existing homes fell by 8.4 percent to an annual rate of 6.48 million units, it was reported Thursday. That was the biggest decline in the sale of previously owned homes since 1989."

Labels: Construction News, Housing Starts

News from Marketwatch: "Government statistics released this week showed a pickup in the construction of multifamily housing. But the data most likely was influenced by a warm December. And it's just as possible that January's cold snap in many parts of the country could create a reversal in the next set of numbers.

So says Mark Obrinsky, chief economist for the National Multi Housing Council. He expected to see December housing starts, released on Thursday, to be higher than usual. Starts of multifamily housing jumped 42%, according to the Commerce Department.

Truth is, the underlying story in multifamily housing is that markets around the country are starting to normalize, industry observers say.

The craze of condo construction is coming to an end. Renters aren't fleeing apartments to dive into homeownership as they had been in previous years. Rents are rising modestly, and are predicted this year to rise at, or a bit higher than, the rate of inflation.

In fact, many say that we're several years away from the real sea change in multifamily housing. When large numbers of echo boomers, children of the baby boomers, move out of the dorms and into their first apartments, more supply of rental units may be needed. Around the same time, their parents may be interested in downsizing from a house to a condo.

A demographic trend like that could create a genuine spike in building, one that lasts beyond a warm holiday season."

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Labels: Construction Industry, Construction News, Housing Starts