While the White House shifts to class warfare on economic and fiscal policy, indicators show more bad news for the US on his watch. The Commerce Department issued its report on residential construction this morning, with decidedly mixed results. Permit applications rose 3.2%, but that was the end of the good news:
Privately-owned housing starts in August were at a seasonally adjusted annual rate of 571,000. This is 5.0 percent (±10.6%)* below the revised July estimate of 601,000 and is 5.8 percent (±12.0%)* below the August 2010 rate of 606,000.
Single-family housing starts in August were at a rate of 417,000; this is 1.4 percent (±10.3%)* below the revised July figure of 423,000. The August rate for units in buildings with five units or more was 148,000.
Privately-owned housing completions in August were at a seasonally adjusted annual rate of 623,000. This is 2.7 percent (±12.7%)* below the revised July estimate of 640,000, but is 2.6 percent (±13.2%)* above the August 2010 rate of 607,000.
For Reuters, this news was … well …
New construction of homes fell more than expected in August, dragging on economic growth and keeping pressure on President Barack Obama to do more to help the sputtering economy.
How could this be unexpected? Haven’t the last three years been enough to temper expectations? Apparently, they’re not tempered enough:
“The housing market is not only bad, but still missing low expectations,” said Sal Catrini, a managing director for equities at Cantor Fitzgerald & Co in New York.
There are two problems pressing on the home markets, especially in new construction. The first is a glut of inventory in resales, which Reuters describes as an “overhang.” That overhang will get temporarily worse this year as stalled foreclosures from the previous two years finally start moving towards resolution, which is why foreclosure notices leaped upward this summer. That will also depress home values further as cheap inventory competes for buyers.
The second is obvious: a lack of qualified homebuyers. Until we restart the engines of massive job creation, we won’t produce enough qualified buyers to eat into the bulging inventory of homes we will have when those foreclosures hit the market. Thanks to a set of feckless economic policies on which Obama has doubled down this month, we won’t be seeing any help on the horizon for months to come. The only people who will be surprised by the inevitable stagnation and decline will apparently be the gaggle of economists that Reuters continues to consult.