| The Commerce Department reported last week that | | | | smallest such inventory since November 1982. The |
| new US housing starts fell a whopping 10.5 percent in | | | | extension and expansion of the homebuyers tax |
| October, diminishing the optimism many analysts have | | | | credit should encourage builders to build, and that |
| had in recent months about the housing market. | | | | number should rise steadily over the next few |
| October’s new construction starts came in at a | | | | months. Before the decline in construction hit in |
| seasonally adjusted rate of just under 530,000, the | | | | October, housing starts had been fairly steady for |
| lowest it’s been since April. The 10.5 percent | | | | four straight months. The early part of the year saw |
| drop from September numbers is the largest monthly | | | | significant increases in housing starts as the building |
| decline this year. | | | | industry rebounded from record lows set in January. |
| Surprised by the drop, many analysts had actually | | | | New building permits for single family homes, |
| predicted an increase in construction. A major factor | | | | considered a strong indicator for future construction, |
| contributing the drop is builders’ uncertainty as to | | | | fell only slightly in October. Analysts say that this |
| whether or not the government would extend the | | | | means that builders are just waiting for market |
| $8,000 tax credit for first time homebuyers beyond | | | | conditions to become more favorable. And the tax |
| the original deadline of November 30th. Congress did | | | | credit extension should be just what the doctor |
| extend the credit earlier this month, adding a $6,500 | | | | ordered. |
| tax break for existing homeowners who move up. | | | | Government officials caution that monthly housing |
| As a result, new construction is expected to rise in | | | | data can be volatile and can be affected by sampling |
| the near term, and the overall housing market is | | | | or other statistical errors. Many months see the |
| expected to become more active. | | | | government making significant revisions to the data |
| US homebuilders currently have an inventory of | | | | after being released. Some trends in housing starts |
| 250,000 new homes listed for sale, that is the | | | | can take up to four months to show up in the data. |