WASHINGTON – Applications for home building permits, a key gauge of future construction, fell in September by the largest amount in five months — a discouraging sign for the housing industry. A rebound in housing is needed to support a broader economic recovery.
Representatives for the industry told a congressional panel Tuesday that the $8,000 tax credit for first-time buyers needs to be extended and expanded to ensure the housing sector will emerge from the recession.
But the Obama administration, facing soaring budget deficits, has not decided whether to support any extension. And some private economists played down the impact of such a move, arguing that most interested buyers already had taken advantage of the tax break.
Meanwhile, the Labor Department said wholesale prices fell 0.6 percent last month on a drop in energy costs. Outside food and energy, core inflation edged down 0.1 percent. In the 12 months ending in September, core wholesale prices rose a modest 1.8 percent.
The Commerce Department said construction of homes and apartments rose 0.5 percent last month to a seasonally adjusted annual rate of 590,000 units. That was a weaker showing than the 610,000 economists had expected.
The applications for building permits fell 1.2 percent, the second setback in the past three months and the biggest decline since a 2.5 percent drop in April. It likely means construction will weaken a bit in coming months, partly because builders had accelerated projects to complete them before the tax credit expires Nov. 30.
The industry also faces other challenges, including record levels of home foreclosures and unemployment that is currently at a 26-year high of 9.8 percent and not expected to peak until next summer, said Sal Guatieri, an economist at BMO Capital Markets.
But Patrick Newport, a housing economist at Global Insight, said a slow recovery likely will continue because inventories of new homes have fallen so far that builders have an incentive to ramp up sales with or without a tax credit.
"We see a very slow recovery for housing that will gradually gain strength over the next two to three years before construction gets back to more normal levels," Newport said.
Housing has been struggling to recover this year following the worst collapse in decades, which helped pull the overall economy into the longest recession since the 1930s. Real estate agents and homebuilders are lobbying Congress to extend the tax credit, arguing government support remains critical.
At a hearing Tuesday before the Senate Banking Committee, Sen. Johnny Isakson, R-Ga., who spent his career as a real estate agent before being elected to Congress, said "this market is going to die a sudden death" without an extension.
Isakson and committee chairman Christopher Dodd, D-Conn., want to extend the credit until June 30 and to drop the requirement that the credit be available only to first-time buyers at an estimated cost of $16.7 billion.
The lawmakers have suggested that their measure be attached to an extension of federal assistance to the millions in danger of exhausting unemployment insurance benefits.
Housing Secretary Shaun Donovan testified that supporting the housing market "can be very expensive, especially at a time of significant budget deficits."
The administration will make a recommendation on whether to extend the credit in the coming weeks, after studying data on tax filings from the Internal Revenue Service.
The drop in wholesale prices was another sign the recession had kept a lid on inflation. Last week, the government said consumer prices edged up a modest 0.2 percent in September.
But the cost for a barrel of crude jumped $10 this month, hitting $75 for the first time in a year last week and then passing $80 early Tuesday. The value of the dollar plunged in October and because crude is bought and sold in the U.S. currency, international investors who can essentially buy more crude for less have rushed in to snap up oil contracts.
If oil prices continue to rise, gasoline and other energy products, which make up 17.8 percent of the government's Producer Price Index, will become more expensive for consumers in coming months. But analysts said the lingering impact of the recession, along with rising unemployment, will keep a lid on overall inflation.
The 0.5 percent rise in overall housing construction in September followed a 1 percent drop in August that was revised down from an initial estimate of a 1.5 percent gain.
Construction of single-family homes rose 3.9 percent last month to an annual rate of 501,000 units, reversing a 4.7 percent drop in August. Multifamily construction, a much smaller and more volatile segment, posted a 15.2 percent drop following a 20.7 percent rise in August.
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AP Real Estate Writer Alan Zibel and Economics Writer Christopher S. Rugaber contributed to this report.
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jeff b i have your money no answer at 932 no. since monday
jeff b i have your money no answer at 932 no. since monday
also i need the thing that i let you use by friday
eternal thanks cheers yogi guy
yogi and guy http://www.nationalwardogsmonument.org/
housing reality needs to be adjusted
Tell me if I am a nut. Some of the housing data could be off because the new homes the builders want to build can not be afforded by the bubble of folks who want them. Medium to higher end new homes seem to be the core of reason they can't sell any. In many cities there is a glut of 50 to 75 year old homes in bad need of repair, or are vacant or just need serious updating in order to be sold. With builders concentrating on new builds, old neiborghoods just get older. There is no tearing down of older homes to be replaced by similar sized new homes.
In the cities, the new homes should be factory built instead of stick built, trailered to the lot and bolted down, really lowering the cost of the home. The money saved could tear down the old house. Repeat this over and over!
When folks came home from ww2 and factories went crazy with production, many cities built smallish homes for factory workers. The need created the market. Have we grown to the point to where we all need larger homes? There needs to be some attitude and expectation adjustments. The need is to house people with less resources because there is less work. Rebulding, refurbishing and retro-fitting homes should be booming. Then houses should depreciate over time and perhaps only the land keep its value.
In all, if we recover just to go at it again the same way, won't the same thing happen again?
Please quit building wooden homes in burning California and if you can't build floating homes in Louisiana at least ask the Dutch how to built proper dyke systems, maybe do both.
Every household has an
Every household has an ability to afford a certain amount.
If you consider the layers of household income and their other obligations then you can see what is affordable to them.
If all homes were valued as they are and then that value in dollars can be equated into a dollar amount to own or rent as in a monthly cost. That’s the Principal the interest, taxes, insurance, utilities and maintenance.
A good way to look at it is that is your allowable P.I.T.I.U.M and cannot be more than 25% of your monthly gross household income.
It’s simplified but keeping it simple for many is best, that requires borrowing limits based on incomes and not only the ability to make minimum payments as that is a ticking time bomb.
It’s so obvious that spending tomorrows income today drives the economy, but isn’t it as equally obvious that eventually you can go bankrupt doing that.
So now we have dept consolidation, let them package it up and even reduce it, then they can borrow more again at ridiculously high interest. That’s why you have check and go, not even able to keep a bank account.
So you have these homes that may trade at as low as $20,000.00 and then get rented for a couple of hundred a month and thats most months. Trust me you will not get rent every month for more than six months. What you will get is an excuse or an attempt not to pay every other month though.
I had the opportunity to take credit apps, and people all claimed their credit as good…one that made that claim was actually going through a foreclosure. Most just had credit cards they just stopped paying on.
Then the banking lobby gets in on it and says we need to get people access to credit they are being left out they are being left behind.
Our capital is not worth much, its loosing value, why? Is it because we do not take it serious enough?
If you do not have much and we all start off that way, not all of us have wealthy parents to bankroll us. Its then a matter of common sense and survival.
Laying it all out there and facing up to it for what it is, I am not blaming anyone for who I am; thats not something to be respected in my opinion. Pride and dignity is funny like that, you should not be embraced to ask for help? Fuck that yes you fucking should.
If you ask them how it works; people will and should tell you, but check three times at least; people lie and also can be very misinformed. If your surrounded by and isolated in ignorance then your are fucked, your on your own; if your ignorant then slap the victim label on your head and call it a day.
This is the bed you made and you can sleep in it. The rules are being altered and manipulated to victimize you and its going on everywhere. They say they will help you while they are fucking you over, that’s ok though because you are already intellectually fucked up; thats because you were never encouraged to think for yourself; you were always told what to think. You can’t discern the time without a watch, which way is north? You have no clue….you are inherently lost.
Most that are lost in it do not care, they seek out other drama to entertain themselves.
Each has a value that they must be held to and that is the only entitlement and addressed with respect to the realty of that. If they see it differently then they need to be told this is how it work and make it work or deal with it as it is.
Tear down their homes they will move to other homes, that’s a diaspora and we seem to be choreographing that in degrees; something to do with a theory that sitting next to a dysfunctional ass makes them smarter? Please do not attempt to rationalize it for me….it does not work as those that seem to be such victims are not able to find work. Even when employed they often refuse to work or even listen….fuck with their heads some more and see what that gets us.
Come sit by me my friend and let me explain to you how the man has screwed you over, it is abstract and will not pay the bill for you or even get you ahead, but it may get me some work for me though or at least ease my inherently entitled ass.
Never ever trust a politician or a journalist and the activist will screw you down the road, like kicking a can down the street.