My Two Cents

Sep 17 2009 11:25AM | Permalink | Email this | Comments (4) |
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By Susan Bady

The Wall Street Journal and other major media outlets reported today that housing starts posted a moderate increase because of a resurgence in apartment construction. The increased apartment activity offset the first decline in single-family home starts after five straight increases. The net effect: starts increaased 1.5 percent in August.

In addition, the number of jobless claims declined and U.S. builder confidence of sales prospects for new single-family homes increased, according to the NAHB.  

Is this a sign of a true recovery or just a blip on the radar? It depends on who you ask and what you read. I tend to believe those who say that although we may have reached the bottom, we still have a long, hard road ahead of us. And for every positive report, there's a sobering corollary. Yes, builders are feeling more confident, but the NAHB's housing market index -- which gauges that confidence -- has only risen 1 point, now standing at 19. It takes a reading above 50 to indicate that more builders are feeling positive than negative about sales conditions. No doubt many builders, as well as home buyers, are nervously eyeing the calendar as the November 30 expiration of the first-time buyer tax credit looms.

Moreover, the California legislature failed to renew the state's $10,000 new-home buyer tax credit. Bigger issues such as prison reform pushed it to the back burner. There's still a chance the renewal bill could be passed in a special session later this year, but the clock is ticking ... loudly.

For now, though, I'll look on the bright side. In August, construction of multifamily housing with two or more units jumped about 25 percent, and within that category, groundbreakings of homes with five or more units were about 35 percent higher. And the builders, designers and consultants I've been talking to see a lot of promise in the entry-level market. Let's hope for an extension of the federal tax credit -- it's been proven to work.