Tuesday, August 19, 2008

Crashing Housing Starts: Is It A Good Number or a Bad Number?

Floyd Norris takes the conventional view:

How bad are the new housing start numbers? Horrid.

Here’s one statistic: The government calculates that construction began on 59,000 single family homes in July. The last time that few homes were started in a July was, well, we don’t know. It was before 1959, when the government started counting housing starts.

I say this is a great number. With housing inventories bursting at the seems, the last thing you need is a huge bundle of new houses coming on the market. The fact that new housing starts are crashing is a sign that basic economic principles work. No need for government intervention. There is a glut of houses on the market so the construction of houses has declined to levels not seen since Donald Trump was probably playing in his jammies with an erector set

Father Market is patrolling and has signaled to the construction kids to stop for awhile, and they are.

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