Jun 18 2008
Why Home Values May Rise When Home Building Falls To A 17-Year Low
A “Housing Start” is a new home on which construction has commenced and in May, Housing Starts fell to a 17-year low nationally.
At first glance, this may seem like a negative for the already-battered U.S. housing market.
It’s not.
Falling Housing Starts reflects the broader real estate market and shows us that builders are working hard to get their already-built homes “off the books”.
It would be foolish for them to build new homes now — each new unit makes selling the existing ones tougher.
So, when we look at the figure objectively, we can see that Housing Starts reaching a 17-year low is actually good news — real estate prices are based on Supply and Demand, after all.
With Housing Starts touching new lows, we can infer that there will be fewer new homes coming on the market in the coming months and that should help support higher home values nationwide for everyone.
(Image courtesy: The Wall Street Journal Online)
