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Home Construction Plunges, Foreclosures Soar

Posted by: Chris Palmeri on April 16, 2009


Lots of bad housing news out today. The Commerce Dept. reports a 10.8% decline in new home construction to an annual rate of 510,000. That’s the second worst number in 50 years. The government said permits filed for new projects was down 9%. This is worse than folks had thought a reversal of the trend from February which had been surprisingly strong, mostly due to new apartment construction.

Meanwhile, RealTrac, the foreclosure tracking service, reports a nearly 24% increase in foreclosure related filings nationally to 803,000 for the first quarter. That was a 9% increase over the fourth quarter of last year. March was the worst month ever for filings, an indication that the policy by some big banks to half foreclosures over the holidays have ended.

“In the month of March we saw a record level of foreclosure activity — the number of households that received a foreclosure filing was more than 12 percent higher than the next highest month on record,” said James J. Saccacio, chief executive officer of RealtyTrac “Since much of this activity was in new foreclosure actions, it suggests that many lenders and servicers were holding off on executing foreclosures due to industry moratoria and legislative delays. It’s also likely that the drop in REO activity can be attributed to these processing delays, rather than to any of the foreclosure prevention programs currently in place. It’s very likely that we’ll see the number of REOs increase again now that most of the moratoria have been lifted.”

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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.

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