Housing Permits Decline
November 23, 2007
According to a recent government report, the number of housing permits applied for and issued nationwide sank to a 14 year low in October 2007. Actual housing starts move upward but only slightly.
Housing permits are used as a gauge of builder’s confidence because they are less likely to be impacted by the weather. Permits dropped to an annual level of 1.18 million from 1.26 million in September. This is the most severe drop in the seasonally-adjusted level of permits during a one month period since July 1993.
The drop caught some economists by surprise who had estimated the decline to level off at about 1.2 million. Housing starts, on the other hand, rose to an annual rate of 1.23 million; this is up from 1.19 million in September.
The decline in housing construction is thought of as a necessary evil as the market tries to sell off some of the housing inventory that is already on the market. With the glut of homes now on the market for sale, new home construction will simply have to wait it out before it is expected to fully rebound.
One of the hardest hit is the nation’s number three homebuilder, D.R. Horton. The company reported a 35 percent drop in its last reported quarterly sales.