According to reports, housing starts plummeted by 10% in May, falling to 593,000 units after being seasonally adjusted. Of course, this is hot on the tail of the first time home buyer credit expiring at the end of April. As such, the drop wasn’t exactly unexpected. Still, it has left many wondering just when the sector will finally return to its normal and healthy levels.

When looking back to the economic expansion that occurred in the 1990s, the median expansion rate was roughly 1.4 million units per year. Clearly, it would be unreasonable to hope for the same housing bubble of about 2.0 million units to occur. Furthermore, even when assuming a 15% increase in the number of starts each year, it would still take about five years to get back to the “normal” 1.4 million rate. On the other hand, starting at such a low base point, it is possible to increase by 20% or even Brand Viagra 25% each year, which means it could take even less time to return to normal levels.

So, the question remains, just how likely is it that a boom in starts will occur within the current economy? Not only is there a reduction in new home inventory, but there has also been a 7.8% increase in starts since May of 2009. Furthermore, housing starts bottomed out in April 2009, at which time they fell to 477,000. As such, the overall rise has many feeling as if things are moving in the right direction. Others don’t see such a pretty economic picture, however, as housing starts have clearly experienced a roller coaster ride over the last several months and these rises and falls can be tied to the start and end of the home buyer tax credit.

Another area of concern is the fact that the number of building permits fell significantly in May, dropping by 5.9% to an annual rate of 574,000. This is particularly disheartening considering the rate fell by 10% in April as well. Obviously, the number of building permits being requested and approved each month is a telltale sign of the number of starts that are likely to occur in the near future.

Overall, things don’t look good for a building boom in the next quarter. Not only has the tax credit expired, but builders simply are not seeing the demand to warrant increasing the number of homes being built. In all likelihood, builders will wait until they see a sustained monthly job growth of about 150,000 to 200,000 jobs coupled with an increase in household income before a significant amount of new construction will take place.

Author Bio: Jim Olenbush works in the Austin real estate industry. His team sells central cialis cheap Austin real estate, and they are very experienced with Steiner Ranch. Jim and his team would love to answer any questions you may have about the area.

Category: Finance/Real Estate
Keywords: first time buyer, tax credit, real estate, market, economy