National Housing Starts Down 11 Percent – Sellers May Command Higher Prices Soon

Housing data rarely cuts one way universally.  There are always two ways of looking at things:

1. From the seller’s perspective
2. From the buyer’s perspective

Normally, when data reads well for one group, it means bad news for the other.  This is true for rising home prices, average days on market, etc.

Home Sellers Get Some Good News Regarding Housing Prices

The group that benefits from the latest bit of housing news is the seller’s group.

A government report released last Thursday showed that Housing Starts fell 11 percent nationwide in March and also fell short of analyst expectations.  For clarification: A “Housing Start” is a new housing unit on which construction has started.

The press is calling this a stumbling block for the economy, but that’s not exactly true.

Fewer Housing Starts Means Less Overall Housing Inventory

Fewer Housing Starts last month means that fewer new homes will come on the market later this year.  This is not necessarily a bad thing – especially if you’re planning to sell your home sometime during the latter part of 2009.

With fewer homes for sale, the supply-and-demand curve should shift in favor of home sellers.  This helps stabilize home prices at a time when they might otherwise be likely to fall.

Despite what some folks may say about low numbers in new units being a sign of things slowing down, I contend that we should look at a lower housing starts number in a positive lights. If it’s true that stable housing markets are key in an economic recovery, then fewer Housing Starts is actually a push in the right direction.

But there’s more to the story…

As footnoted in the Commerce Department’s report, a statistical disclaimer states that the margin of error in reported Housing Starts for March 2009 was so high, that the report’s conclusion is just a guess.  Technically, the entire report is invalid anyway!

So, the government won’t issue its final March 2009 Housing Starts data for months.  If the initial figures remain as reported, home sellers may be in position to command higher sale prices later this year to the detriment of home buyers.  It’s basic economics.

And from a home seller’s perspective, that news is good.   If you’re planning on buying a home, you may want to get a move on.  Should housing starts continue to slow, home prices will continue to rise.

Related articles by Zemanta

• Home building takes a big dip (money.cnn.com)
• Never mind: Housing starts fall to lowest level since 1940s (dailyfinance.com)

I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!

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