Posts (RSS)Housing Starts Rose Despite Rise in Foreclosure Properties
Housing starts climbed by 2 percent to a yearly pace of 520,000 in April despite a 32-percent rise in number of houses at risk of becoming forclosure properties, according to a survey of economists by Bloomberg News.
In April, RealtyTrac’s report showed that over 342,000 houses were hit with default notices, auction sale notices and foreclosure notices.
Housing starts rose from low levels in March as signs of the bottoming of home prices are beginning to appear.
The survey showed that the number of building permits probably increased to 530,000, an increase of 2.7 percent. Building permits are being used as indications of future home building activities.
Home builders are starting to start some projects as the glut of foreclosure properties is being reduced by first time home buyers enticed by low mortgage rates and tax credits and by investors encouraged by low prices of repo properties.
Significant reductions of inventories of foreclosure properties are being viewed by economists as crucial for the start of a housing recovery and ultimately economic recovery.
Still, home builders are not rushing to produce homes because the nationwide unemployment rate is still at its 25-year high, the number of foreclosure properties is still rising and credit conditions are still tight.
Tom Porcelli, a top economist at New York-based RBC Capital Markets Corp., said the rise in housing starts is an indication of confidence in the stabilization of certain economic data. But he warned home builders not to rush because there are still many risks.
Housing data have indicated some positive signs in recent weeks, with sales of new and previously-owned homes rising from their lows.
Confidence among homebuilders has also risen this month to its highest point since September last year, according to the confidence index managed by the National Association of Home Builders and Wells Fargo.
According to a National Association of Realtors report, foreclosures helped pushed down home prices, with foreclosure properties accounting for nearly half of total sales of previously-owned homes in the past months.
Also, the decline in housing construction cut down the excess supply held by home builders, pushing down new-home inventories to their lowest levels since 2002.
Home builders D.R. Horton, Pulte Homes and Centex Corp. all reported first-quarter losses, but they are encouraged by rising sales of foreclosure properties, low mortgage rates and other incentives to stimulate home buying.