Economist's Commentary: October 17, 2008
Quick Take on the Economy: October 17, 2008
By Ken Fears, Manager of Regional Economics 
Residential Construction
- Housing starts tumbled 6.3% between August and September of this year. Compared to September of 2007, starts are down by 31.1%.
- Permits for construction of new residential housing fell 8.3% from August to September and are down by 38.4% compared to 12 months earlier.
What does this mean for Realtors® and consumers?
- The decline in construction means that builders are anticipating that it will take longer for sales to pick up in areas where they have built heavily in recent years…in essence, they think the economic slowdown will take longer to work itself out and create new demand.
- However, the sharp decline in construction is a healthy move for the overall housing market. This decline means that there will be a further reduction of the supply of new homes coming to the market.
- Finally, new construction tends to be in areas where land is cheap, normally on the periphery of large metro areas. Price and sales trends of new homes do not necessarily affect markets in more urban markets where most homes are in the existing market.
Daily Forecast Update
- NAR's monthly official forecast as of October 8th (15K PDF)
- GDP Q3: -0.3%
- GDP Q4: - 0.6%
- Unemployment rate at year end: 6.5%
- Average 30-year fixed mortgage rate in December: 6.5%
- Average 30-year fixed mortgage rate by mid-2009: 6.4%
- The next Fed policy change: a rate cut at the end of October.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
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