The US Department of Commerce reported that Building Permits for the construction of new homes fell to their lowest levels in 14 years, as a clear oversupply of new housing limits consumer and investor appetite for further capital investments. Housing Starts likewise fell just above 14-year lows, and few seem willing to break ground on new residential construction projects. The effects of the housing recession were particularly pronounced for single-family homes, with the annualized groundbreaking rate falling to a meager 829k on the month—its worst since 1991. A jump in financing costs has been especially difficult on individual homeowners, while investors—those more likely to build multi-family structures—seem to remain on more solid footing. Such developments speak poorly for the future of consumer spending, and the US Federal Reserve will undoubtedly monitor the housing recession spillover to the broader economy.
Written by David Rodríguez, Currency Analyst for DailyFX.com
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