Housing Starts

From the Lexington Herald-Leader 1-17-08

Home builder confidence near record low

A reading of U.S. home builders’ outlook remained near a record low in January as gloom engulfed the housing industry. The National Association of Home Builders said Wednesday that its housing market index, which gauges builders’ perceptions of current conditions, interest from potential buyers and expectations for home sales over the next six months, came in at 19 in January – the second-lowest point on record. The group also revised December’s reading downward by one point to 18, the lowest since the index began in 1985.

Housing starts

Tighter lending conditions, expensive gasoline and tougher job market are helping to limit demand for homes. The supply of homes, meanwhile, is bloated. To compensate, homebuilders have cut back on construction. Economist predict a 4 percent drop in December housing starts, compared with November. Global Insight economist Patrick Newport is looking for housing starts to drop by another 20 percent before turning around later this year.

Jonah’s Thoughts: Although these numbers are extreme they are needed for the correction to happen.