US housing market update

The Commerce Department today released its "NEW RESIDENTIAL CONSTRUCTION IN APRIL 2007"...key points from the report include:

-applications for building permits plunged by the largest amount in 17 years
-housing construction is 25.9 percent lower than a year ago
-builders cut their requests for new construction permits by 8.9 percent in April...that was the sharpest drop since a 24 percent fall in February 1990

So housing will continue to shrink its contribution to US GDP; sectors that provide supplies and services to builders and homebuyers will continue to see shrinkage of their revenues as well. For example, lumber prices are below the $230 US level, significantly lower than the highs of $400 US reached in 2004 and 2005. Also, The Housing Bubble Blog has this quote that makes sense...“‘Walk into any…Best Buy or Circuit City and ask them about sales of big-screen TVs and computers,’ said Mike Morgan, broker in Stuart. ‘Boats, cars, clothing, jewelry and more,’ he said, ticking off big-ticket items that debt-plagued homeowners can no longer afford."

A couple of anecdotes gathered by The Housing Bubble Blog of interest...

-The Palm Beach Post...Florida had the second-highest number of filings in the nation with a total of 14,318 households entering some stage of foreclosure last month.”

“‘I know that banks are pleading to take properties off their hands even before they get to their REO (real-estate-owned) department,’ said Delray Beach luxury homebuilder Frank McKinney. ‘Twenty years ago, we sat on the courthouse steps and bid on properties and bought them.’”

“That’s no longer happening, McKinney said, ‘which shows me this huge flood of foreclosures will continue to hit South Florida well into next year.’”

-“James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, New Brunswick, is concerned the state is in the middle of a multiyear housing down cycle, on par with the bust years of 1988 to 1992.”