6-month High Starts off New Housing

Concerning new construction, the growing number of delinquent mortgages could slow the growth.

In January, builders weren't going to let a little snow slow them down, with the expiration of the homebuyer tax credit only months away.

According to the Department of Commerce, builders got to work as housing starts rose 2.8% from December to reach their highest annual rate since July, a seasonally adjusted 591,000 units that also was 21.1% above the year-ago levels, in preparation for a surge of spring homebuyers.

Generally considered a gauge of future activity, building permits fell 4.9% from December to a seasonally adjusted annual rate of 621,000.

After two months of sharp increases, the fall came, and the rate still was 16.9% above the year-ago estimate of 531,000 units.

The Wall Street Journal warns that signs of a turnaround are still in their infancy, despite what seems like good news for new construction.

Among issues that could drag it back down again:

- unemployment
- the end of the tax credit in April
- fears of rising lumber costs
- foreclosures

It seems unlikely that the oversupply of "used" homes will be going anywhere fast, after an analysis by TransUnion was published.

Compared with the fourth quarter in 2008, the credit-reporting agency found that about 50% more borrowers were 60 days or more behind on their mortgages in the fourth quarter of 2009.

With the number of delinquent borrowers hitting an all-time national average high in its 12th straight quarterly increase, reaching 6.89%, it seems no end is in sight to the number of foreclosures we can expect to see in the housing market.

In January, single-family starts increased 1.5% from December to a seasonally adjusted yearly rate of 484,000 units.

Multifamily units increased 9.2% from December to a yearly rate of 107,000 units.

Source: msn.com