“Privately-owned housing starts in October were at a seasonally adjusted annual rate of 519,000. This is 11.7% below the revised September estimate of 588,000 and is 1.9% below the October 2009 rate of 529,000,” according to the Commerce Department.
The data complements grim news from S&P yesterday that home prices could drop another 7% to 10% next year.
Although the data is mute about the extent of the problem, it remains concentrated in several states in which home prices are down 50%–California, Nevada, Michigan, Arizona, and Florida. It may take years to clear out this inventory which means housing starts may be near zero.
The foreclosure forecasts for the next two years have also gotten worse. The Fed’s Rivkin says that foreclosures will be over 2.5 million this year and in 2011 and will not drop appreciably in 2012.
Douglas A. McIntyre