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Housing Stats: Completions Down (Good) But Vacancies Up (Bad)

New Home
AP
New Home

A lot of folks were turning the tables on some scary looking numbers yesterday, namely that housing starts and permits were down much farther than expected.

The consensus was that’s a good thing because it will inevitably bring down inventories. Simple math: the fewer homes you start, the fewer will end up on the market.

But most missed an even better, less-long-term indicator from the same report, namely the “housing completions” number, which dropped 17 percent from the month before. These are homes that are going on the market immediately. To see an even larger drop in these homes is even better news for the over-glutted inventories.

Now I’m not saying this is over by any stretch. Builders are still not pricing aggressively enough to bring in more buyers, and despite lower mortgage rates, buyers are still afraid to catch this ever-falling knife.

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I also heard another stat yesterday that is troubling: vacancy rates. The vacancy rate on existing homes is really only around 2 percent, which is close to normal levels, but the vacancy rate on homes built since 2001 is far, far higher.

We all know what empty homes do to a neighborhood, but we’re now looking at brand new developments, filled with empty homes. That means the retail doesn’t move in and the other services don’t move in, and that just turns back around to potential buyers who don’t want to move in.

I guess to every silver lining, there is a cloud.

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