America's housing crisis/problem just took another kick in the ass within the last couple of days. This Diary will be short and to the point and not so much my thoughts as just regurgitation of recent news reports. First, as everyone has heard, new housing starts are at historical lows as reported by U.S. Department of Housing and Development on January 22, 2009, to wit:
Privately-owned housing starts in December were at a seasonally adjusted annual rate of 550,000. This is 15.5 percent (±9.3%) below the revised November estimate of 651,000 and is 45.0 percent (±6.1%) below the revised December 2007 rate of 1,000,000.
Single-family housing starts in December were at a rate of 398,000; this is 13.5 percent (±11.2%) below the November figure of 460,000. The December rate for units in buildings with five units or more was 145,000.
An estimated 904,300 housing units were started in 2008. This is 33.3 percent (±1.3%) below the 2007 figure of 1,355,000.
LINK
And just how low is this comparatively?
In 2008, 904,300 housing units were started, down 33.3% from 2007, the lowest level since at least 1959, when the department first started tracking the data.
It was also the largest year-over-year decline since 1974.
Housing starts declined to a seasonally adjusted rate annual of 550,000 units in December, down 15.5% from a revised November number and down 45% from a year ago.
The figure fell short of economists’ estimates of 610,000 units.
New construction of single-family homes fell to a rate of 398,000 units, down 13.5% from November and down 49% from the comparable month a year earlier.
Building permits for new homes, which serve as a barometer for future construction, also hit record lows.
LINK
In short, December 2008's housing starts were at a rate of 398,000, or 44% of all 2008's housing starts of 904,300, and the 2008 housing starts were the lowest since they began keeping these statistics in 1959. Also, please note these figures, i.e., 398,000, are significantly significantly below the the "economists’ estimates of 610,000 units."
That said, I've heard it said that lower housing starts can be seen as a good sign in that with less housing starts, there is a greater chance that the existing stock of homes for sale will have less competition with "new home construction".
But, guess what, that stock of existing homes for sale just got a whole lot larger, to wit:
There is probably even more excess housing inventory gumming up the market than current statistics indicate, thanks to a wave of foreclosures that has yet to hit the market.
The problem: Many foreclosed homes and other distressed properties that are now owned by banks have yet to be listed for sale. The volume of this so-called 'ghost inventory' could be substantial enough to depress already steeply falling prices when it does go on the market.
"That's not good news," said Pat Newport, an analyst with IHS Global Insight. "[Excess] inventory is the biggest problem in housing these days, and it leads to lower housing prices, which leads to more foreclosures."
LINK
And do not even begin to think or suggest the wave of home mortgage foreclosures has bottomed out or leveled off.
And despite those efforts on the part of both the government and the banking industry to quell the housing crisis, defaults continued to climb as 2008 came to an end. Foreclosure filings were up 17% in December over November, and rose 41% compared with December of 2007.
"The big jump in December foreclosure activity was somewhat surprising given the moratoria enacted by both Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM, Fortune 500), along with programs from some of the major lenders and loan servicers aimed at delaying foreclosure actions against distressed homeowners," said Saccacio.
Both of the government-sponsored mortgage giants suspended foreclosures starting November 26, 2008 through January 31, 2009.
LINK
Given the gurus in New York, Washington, D.C. and across America appear to agree that the American economy will not begin to turn around until the housing crisis begins to bottom out or turn around, from my perspective, the term tough sledding, will not be limited to the cold winter months of 2009.