By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – So new home construction was down in August. It was still a sizzling summer for homebuilders, thanks to low interest rates. And healthy optimism remains for the rest of the year. I'm Maxine Shapiro with KERA Marketplace Midday.
August housing starts may have startled a few people, but no one is really complaining. After July's 17-year high, it was expected that construction would cool off. And the Commerce Department reported it did fall by 3.8 percent, adjusting the annual rate of new homes to 1.82 million units. Economists were not projecting that big of drop. And it's just not that big a deal. Housing permits for future building rose 4.8 percent and economists had expected that number to be flat.
I mean, think of where the economy would be, if it weren't for the housing market. And our little ray of sunshine could continue at least until 2004. Okay, so maybe mortgage rates bottomed out, but historically speaking - they're low. After June's 5.21 percent, the lowest in more than four decades, last week's 30-year mortgage rates were at 6.16 percent. I think the numbers speak for themselves.
And homebuilders Lennar Corp and KB Homes reported strong third-quarter earnings. And both beat analysts' expectations. But KB experienced a 22 percent decrease in sales in the Central region, including Texas. A KB spokesperson said sales were "soft" in Austin and San Antonio. They quoted industry statistics declaring new home sales in Austin alone were down 40 percent and down 7 percent in the Dallas/Fort Worth area. KB Homes orders were up 3 percent in the Metroplex. KB Homes builds primarily for first time homeowners and some analysts worry that market might be slowing down. And once again, the component to make or break that theory is - the labor market. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
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