New housing permits at lowest level since 1997

A report released by the home builders indicates that new permits for construction hit its lowest level since 1997. This is a sign that the home builders are expecting more pullback in values.

Building permits are seen as a measure of the builders confidence in the market. The pullback indicates the expectation that the market will deteriorate further before hitting bottom. Unlike the general housing starts numbers which are largely effected by regional weather issues, the new permits are more effected by the builders overall view on the coming market.

The National Association of Realtors (NAR) report indicated that the recovery is not expected to start until 2008 and that it would be a slow one. Part of this is blamed on the subprime mortgage slide which has forced lenders to adopt more stringent guidelines for home loans making it tougher to qualify and thus reducing the overall number of qualified buyers.

This is a time for very cautious speculation but as I have stated frequently, it should not have any impact on those looking for a long term purchase. It is a great time for negotiating a good deal if you are planning on holding the property for at least 5 years.

Popularity: 3% [?]