New Home Building Plunges
publication date: Feb 27, 2009
New homes building data was released for January and the news media was all over the horribly negative numbers which are down 48 percent from a year ago and were said to hit a new all-time low. And, as you can see from the following scary graph, home building has fallen off a cliff in recent years and are down more than 75 percent from their mid-2000s peak (and this despite the fact that as you can see mortgage interest rates are at very low levels).
Once again, news reports are lacking a historic perspective so here it is.
Take a look at this graph which shows new housing starts over many good and bad economic cycles over the past 50 years.
We can see several important things from this long-term data:
Another way to get historic perspective on this current slump in new home building is to look at the long-term stock price charts of some of the bigger new home builders. Check out this long-term chart of Toll Brothers where you can see that while the stock has suffered a major decline in recent years, it's still in a long-term up-trend since the late 1980s. This is also the case when looking at big home builder Pulte's chart.
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