The market for new home construction continued to stumble in June, as starts fell by 5.0%. This is worse than it sounds. Today's report from the Census Bureau also revises downward May's annualized rate of starts from 593,000 to 578,000, making its drop 14.9%, instead of the 10.0% drop reported last month. Moreover, June's rate of 549,000 was well below the 575,000 analysts expected. Americans continue to demand fewer new homes without the home buyer credit.
Here are starts on a historical basis:
As you can see, June's rate is approaching October's downward spike. It would only need to drop another 13.1% to hit the April 2009 record low. Recently, downward revisions have been the norm for starts, so don't be surprised to June's number drop even further when it's revised in August.
But surprisingly, permits were slightly up in June -- by 2.1%. Obviously that's not much, but it's a lot better than another drop. If the trend holds up, it could indicate that the market for new homes has hit bottom. The number of new permits is a leading indicator. Yet, considering how much inventory is still out there providing opportunities for home buyers to purchase foreclosured properties and short sales, it's a little hard to believe that demand will rebound much for new houses anytime soon. Here's the chart for permits: