AI
Friday, November 17, 2006 11:08:35 PM
interesting fact, despite of the housing starting plunge to six-year low and new construction of homes down 14.6% to 1.486 million pace; but some of the homemaker stocks rose significantly last month (except USG), strange
By Rex Nutting, MarketWatch
Last Update: 12:11 PM ET Nov 17, 2006
WASHINGTON (MarketWatch) -- Home builders retreated on a massive scale in October, dashing hopes that the bottom has been found in the troubled housing sector.
Starts of new homes plunged 14.6% last month to a seasonally adjusted annual rate of 1.486 million, the lowest level since July 2000, the Commerce Department estimated Friday.
Building permits fell as well, down 6.3% to a seasonally adjusted annual rate of 1.535 million, the lowest in nine years. It was the largest percentage decline in permits in seven years.
"The worst in the housing sector has not yet passed," said Ray Stone, chief economist at Stone & McCarthy Research.
The data carry potential implications for policymakers at the Federal Reserve, economists said.
"Housing activity is falling more than the 'soft landing' scenario, incorporated into the Fed's forecast, and the forecasts of most private-sector forecasters," Stone wrote clients.
"A swift reaction on the part of home builders to adjust supply to be more in line with weaker demand is not likely to unnerve the Federal Reserve," wrote Joshua Shapiro, chief economist for MFR, in an e-mail.
But Stephen Stanley, chief economist for RBS Greenwich Capital, saw a silver lining in the October data.
"We see this as an unambiguously good thing," he wrote. "The faster builders address their bloated inventories and bring the pace of home construction down, the quicker the housing correction will play out and the economy can return to a more normal footing."
Housing starts are now down 27.4% from October 2005 levels, and building permits are down 28% on a year-on-year basis. So far in 2006, starts are down 11.1% compared with the first 10 months of 2005. Read the full government report.
October's decline was much larger than expected by Wall Street economists, who had been forecasting a 4.5% drop in starts to 1.69 million as well as a marginal decline in building permits to 1.62 million. See Economic Calendar.
Moreover, September's starts data were revised lower, to 1.74 million from 1.77 million. Permits were revised higher, however, to 1.638 million from 1.620 million.
http://tinyurl.com/yer52n
By Rex Nutting, MarketWatch
Last Update: 12:11 PM ET Nov 17, 2006
WASHINGTON (MarketWatch) -- Home builders retreated on a massive scale in October, dashing hopes that the bottom has been found in the troubled housing sector.
Starts of new homes plunged 14.6% last month to a seasonally adjusted annual rate of 1.486 million, the lowest level since July 2000, the Commerce Department estimated Friday.
Building permits fell as well, down 6.3% to a seasonally adjusted annual rate of 1.535 million, the lowest in nine years. It was the largest percentage decline in permits in seven years.
"The worst in the housing sector has not yet passed," said Ray Stone, chief economist at Stone & McCarthy Research.
The data carry potential implications for policymakers at the Federal Reserve, economists said.
"Housing activity is falling more than the 'soft landing' scenario, incorporated into the Fed's forecast, and the forecasts of most private-sector forecasters," Stone wrote clients.
"A swift reaction on the part of home builders to adjust supply to be more in line with weaker demand is not likely to unnerve the Federal Reserve," wrote Joshua Shapiro, chief economist for MFR, in an e-mail.
But Stephen Stanley, chief economist for RBS Greenwich Capital, saw a silver lining in the October data.
"We see this as an unambiguously good thing," he wrote. "The faster builders address their bloated inventories and bring the pace of home construction down, the quicker the housing correction will play out and the economy can return to a more normal footing."
Housing starts are now down 27.4% from October 2005 levels, and building permits are down 28% on a year-on-year basis. So far in 2006, starts are down 11.1% compared with the first 10 months of 2005. Read the full government report.
October's decline was much larger than expected by Wall Street economists, who had been forecasting a 4.5% drop in starts to 1.69 million as well as a marginal decline in building permits to 1.62 million. See Economic Calendar.
Moreover, September's starts data were revised lower, to 1.74 million from 1.77 million. Permits were revised higher, however, to 1.638 million from 1.620 million.
http://tinyurl.com/yer52n
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