U.S. housing starts rose more than expected in June to touch a six-month high and permits for future construction "unexpectedly" increased, a government report showed today, reports Reuters.
It's a surprise to Keynesian trend followers, who have no clue how the business cycle works, but for those who understand how Federal Reserve policy works and manipulates an economy, no surprise here at all. Given the accelerated growth in money supply over the last three months, there no surprice here at all.
Wait until the price inflation kicks in.
Specifically, the Commerce Department said housing starts increased 14.6 percent to a seasonally adjusted annual rate of 629,000 units.
Last month, housing starts for multi-family homes soared 30.4 percent to a 176,000-unit rate, while single-family home construction — which accounts for a large portion of the market — increased 9.4 percent to a 453,000-unit pace.
Building permits also climbed. They were 6.9 percent in the multi-family segment. Permits for the construction of buildings with five units and more increased 8.2 percent to their highest level since October 2008. Permits to build single-family homes were up fractionally at 0.2 percent.
More homes being built means more supply added to already flooded housing market
ReplyDeleteWhere is the inflation going to come from?
It should be interesting to see what real estate markets go "up","down", or maintain in this environment.
ReplyDeleteI noticed that a large percentage of the starts were "multifamily" units....meaning apartment complexes from my estimation. Maybe some of the money on the sidelines is rushing to meet renting demand....which would mean residential home values may not rise despite price increases in general due to inflation because they still haven't found bottom yet....
It's all going to be very convoluted....
Inflation may have a downward effect on residential real estate since potential home buyer's funds will be eaten up by other costs (good, energy etc.)
ReplyDeleteAs far as multifamily housing is concerned, we may be headed for a bubble with the all building going on when there are still a lot empty homes out there that will eventually be bought by investors and turned into rentals
I see all of the new construction going on in this area, and I wonder "Are these bozos stupid or do they just like to lose money"? (same thing)
ReplyDeleteThe one ray of sunshine in the housing data was hyped by the cable financial networks, as usual, while the rest of it was played down today. I live within commuting distance of New York City in Westchester County. The residential real estate market here is awful and getting worse. I expect prices to drop further -- possibly 10 to 15 percent before the year is over. Decent paying jobs are scarce and most people have been cutting back on their spending for quite some time now. It's about jobs and wages. There is no recovery in sight, so residential real estate -- at least in my part of the country -- is likely to continue its decline.
ReplyDelete