Sudden bad news for the industry
Recent news showed the slight increase in home values and was speculated by many to be a premature indication of a market bottom. However, two things have spoiled the party this month. First, the Commerce Department reported that home construction plunged to its lowest level in six months to 10.6 percent in housing starts from September. The New York Times adds, “In total, construction was at a seasonally adjusted annual rate of 529,000 housing units in October, falling short of the 590,000 predicted by analysts. Building permits, an indicator of future construction, declined as well, to an annual rate of 552,000, from 575,000, also falling short of forecasts.”
We don’t need expert analysts to explain the cause of this decline. Since the Congress has still pending plans whether to extend the First-Time Homebuyer Credit Program, it’s obvious that home builders are way too cautious if it would benefit them to continue breaking grounds.
Second, mortgage delinquencies have further risen in the lingering financial downturn. BusinessWeek reports, “For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion. That’s up 58 percent from 3.96 percent a year ago… The rate was up 7.6 percent from the second quarter. That’s a much smaller jump than the 11.3 percent rise in the second quarter from the first, and the 14 percent leap seen in the quarter before that.”
This report has one clear indication: with the rate at which joblessness is hitting record highs and home values falling fast, homeowners are finding it much harder to get back to their pre-recession financial standing. The more they delay their mortgage payments, the more they get closer to foreclosing their homes.
That’s two bad news reports in a week. Oh well, nothing has changed.