Single-family Home Building Rises For 5th Month

Source: Associated Press

WASHINGTON — Construction of single-family homes rose 1.7 percent in July, the fifth-straight monthly increase as builders poured foundations at the fastest pace since last October, the Commerce Department said Tuesday.

While single-family home construction is still 73 percent below the frenzied peak in January 2006, it is up 37 percent from the bottom hit last winter. Builders say they are seeing more homebuyers walk through the door, ready to sign contracts. The confidence level of builders is the highest this month than its been in more than a year, the National Association of Home Builders said Monday.

"It's the general trend that matters and with housing, the direction is up." wrote Joel Naroff, president of Naroff Economic Advisors.

Construction of apartment buildings, however, tumbled 13 percent in July. That dragged the combined figure for homes and apartments down 1 percent to a seasonally adjusted annual rate of 581,000 units, from an upwardly revised rate of 587,000 in June. Economists polled by Thomson Reuters expected a pace of 600,000 units.

And though the worst of the housing market bust likely is over, builders are ramping up production cautiously because the market remains flooded with deeply discounted foreclosures.

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your backlog does not diminish.


While builders might be happy, it does not bode well for the housing market in general, because there is still a glut.

there are new houses going up like crazy and people are buying and moving into those homes. On our block alone they are finishing off the last two of four new homes, the other two now have families living in them. We just have one foreclosed home still up for sale and they have already begun clearing a bunch of land around the corner to make way for new homes. You would never know how really bad things were if you were to go by what is happening around here. It's kind of unreal.

http://www.doctorhousingbubble.com/

With all this happy talk coming from the MSN, one would think we all live in a fairytale land..

proper lending calculations, namely 3 times main income and 1 times secondary income with a 10% deposit. Its simple math, for the housing market to move, the first time buyers have to be able to not only buy, but also afford to pay their mortgage. This provides a foundation for 2nd time buyers to move up and so on. What happened in America was that everyone was able to buy Mc Mansions, irrespective of income, so you had a housing market with absolutely no foundation whatsoever. When the defaults naturally started, it was in the 400,000 + bracket, and that is why areas like California are getting it so bad.

The secondary problem in the USA is the banks haven`t adapted to the market. I`ll give you an example. We looked at a house at the weekend, it was appraising at 320,000. The builders were offer a 50,000 incentive, either in upgrades or off the purchase price of the house. I sat down with their mortgage people and asked them the following question, a 50 k incentive on a house appraising at 320,000 is a loan to value to 81%. We already have one house, we have a small mortgage, we don`t want to sell. As such, for us to buy, we need to put down 20%. I offered to make up the extra 1% in cash, and said apply the incentive to the deposit. This gives the bank a LTV of 80%, our income using the most traditional standards more than adequately covers the loan, but was told they couldn`t do that.

This is the problem, it`s the banks. providing your income can cover the loan and the LTV is 80%, there is no reason whatsoever for a bank not to lend, however, in the USA this doesn`t happen. If you want to kick start the housing market, pressure needs to be brought to change banks attitudes.