When you read today’s New Home Construction report from the Department of Commerce, it seems pretty ugly at face value.
Starts are down 6.2 percent and building permits (an indicator of future starts) are down nearly 9 percent. Sounds pretty bad, right? Not if you’re looking for a bottom in the new home market.
Inventory has been the crux of the problem in the new home market. Builders simply glutted the market with far too many homes during the housing boom, and with affordability out of whack, a major correction was inevitable. With starts and permits down well-below the million-unit mark, that could signal more health in the market.