People are getting very excited about the report today that starts on construction of private housing rose 5.9% in September.
Sorry: Despite the September uptick, the housing bust ain’t over yet. The strongest evidence that the slump will continue is that while starts were up, permits fell 6.3% to the lowest level since October 2001. Here’s a sampling of economists’ analysis on the topic.
Global Insight: “On balance, this was not as good a report as the headline number implies.”
Roger Kubarych, UniCredit: “All of the increase [in starts] was in the South, where Katrina-related reconstruction backlogs are still being worked off.”
Ian Shepherdson, High Frequency Economics: “Analysts less bearish on housing than us will doubtless proclaim the starts numbers as evidence that the worst is over, but even a cursory glance at the awful permits numbers should disabuse all but the most incurable optimists of that notion.”
Action Economics: “The sharp contrast between the strength in starts and weakness in permits usually flags some kind of temporary distortion. … August activity may have been held back by inclement weather, possibly leaving catch-up in September.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.