According to a report issued by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD), new construction fell 14.3% in January, to levels 37.8% below January 2006 figures.
This news is not surprising, after reports of high unsold inventories indicated an oversupply of new houses that just don’t sell anymore. Last month, builders were refusing to start new projects and did everything possible to get rid of new houses, including cutting prices and offering various incentives to buyers. Large numbers of new homes remained unoccupied and many builders lost their jobs, so it’s natural that fewer new houses were constructed. Housing starts are expected to decrease in 2007, helping reduce the number of vacant homes waiting for buyers. As supply diminishes to match demand, the market will become more stable and predictable.
And while these numbers indicate positive trends for the Real Estate industry and the economy as a whole, they may be devastating on a company or individual level. Waiting for the storm to pass may not work for any home builder, because the market is expected to stabilize at below-boom levels, thus forcing some companies out and making others cut staff.
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