June Housing Starts Let me see if I can make this really confusing….

Housing starts nationally for June are down 5% which the media purports as bad news..but I say it’s really good. But the real facts are that single family starts aren’t down that much, which sounds good but I say it’s bad. Confused yet? Stick with me.

When the Census Bureau releases housing starts the media will grab that number and pronounce it good or bad, but they never tell you what that number means. A start is really a ground-breaking and includes homes of all types — single family, condos buildings, apartments, and multi-units housing. For June that number was down 5% from May. I don’t know about you, but I don’t really care if apartment and multi-unit starts are down. I know it may effect the overall economy but they don’t mean a whole lot to Mr. and Mrs. Seller down the street.

But the number gets reported in the news as a big drop so that must be a bad thing. Is it really? If there are fewer housing starts then there will be less inventory on the market. Less competition for the re-sale market who wants to make a move. So in my book, a big number might be a good thing. However, when that 5% number is dissected it turns out that the majority of it is in fact multi-unit housing.

The Real Housing Start Number

For June, Single-Family housing starts were only down 0.7 percent from May….essentially flat. That’s a good thing, right? We’ll it certainly says that builders are being very cautious and not carrying too much inventory. The more inventory on the market the more they have to offer incentives and the more the re-sale market has to try and compete with heavy builder incentives. What it really indicates is that new construction has stabilized now that the home buyer tax credits are behind us.

We still have a lot of inventory on the market. Across all price ranges we have about 10 months of inventory in North Fulton and 12 months of inventory in Forsyth County. A buyers market is defined as anything above 6 months of inventory so controlled construction and growth is a good thing in my book. The one constant in this market right now is that rates remain extremely low. While inventory levels aren’t going to change quickly – we don’t really know how long rates will remain at such historically low levels.