Housing Starts Drop Again – But So Do Late Mortgages

The government announced this week that new home construction tumbled in April. Housing starts fell 10.6% in April to an annual rate of 523,000 units. That’s down from a revised level of 585,000 units in March. And, it’s well below the 563,000 units that had been predicted by analysts.
As for building permits, 551,000 were issued in April, down 4% from March’s number of 574,000 units. This was a negative surprise, as it had been predicted that permits would increase in that period to around 590,000 units. The word is that it really isn’t as bad as it may sound, as much of this drop is related to multi-family construction, volatile in even the best of times. Construction of residential properties with 5 or more units fell 28% in April, while it was a 5.1% drop for single family homes.
In some ways this trend feeds on itself. Home construction feeds a lot of families, and those families are home buyers too … at least when the bread-winner is working. Fewer homes being built means fewer construction jobs and fewer families able to buy a home.
As for late mortgages, the news is a little better. In the first three months of 2011, the number of homeowners late on their payments, or making no payment at all fell for the fifth straight quarter. Most news reports verify in their market reporting that the highest delinquency rates are still in Florida, followed in order by Nevada, Arizona, and California.
North and South Dakota continue to be the states with the lowest delinquency rates, though there was a rise for South Dakota in the first quarter. The largest increase percentage-wise for the quarter was in Maine. One report states that if delinquency rates continue to improve at the current rate, it will still take 8 years to return to normal. Part of the problem is the length of time it takes to foreclose, aggravated now by more careful measures after the “robo-signing” issues last year.