New home construction rises, but outlook weakens
By Julianne Pepitone
NEW YORK (CNNMoney.com) -- New home construction ticked higher in July, but indications of future building were weak, the government said Tuesday.
Housing starts rose 1.7% from June to a seasonally adjusted annual rate of 546,000 last month, the Commerce Department said.
Economists were expecting housing starts to rise to 555,000, according to a consensus estimate from Briefing.com.
On a year-over-year basis, starts fell 7% from July 2009.
"Activity in the housing market is likely to remain depressed for several years," Paul Ashworth, U.S. economist at Capital Economics, said in a research note. "Housing is not going to lead the economic recovery."
Future activity: Applications for building permits, a gauge of future construction activity, fell over the month. Permits dropped to a seasonally adjusted annual rate of 565,000 in July, down 3.1% from a revised 583,000 in June.
Economists were expecting a more modest drop to 573,000. Permits were down 3.7% from the same time last year.
"[The permits figure] is not an encouraging sign," Ashworth said. "The 'good' news, however, is that housing is so depressed it is hard to see activity falling much further from such a severely depressed level."
Wichita, KS Metro Area Report
Locally the housing market is walling in the doldrums. Existing home sales fell 32.8% between June and July. This is based on the Tax credit made available the 1st four months of the year with these homes mostly closing in the 1st ½ of the year. The median sales price of existing home sales in July dropped 7.9% on a year over year basis.
New home sales decreased to only 42 units in the metro area. This is a 66.9% drop compared to June. The avg. sales price also rose considerably because most sales were for 1st time buyers in June. That value increased from $160,920 in June to $221,757 in July.
Total new and existing home inventories increased 17.3% over the past year. Months of inventory increased to 8.3 months. Any number over 5-6 months indicates a buyer’s market.
Interest rates still continue at historically low rates. 8-15-10 rates were quoted in the mid 4% rage with 15 year loans breaking into the 3+% range.
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