The end of sanguinity (or sanguineness)

Take your pick - sanguinity or sanguineness (the pronunciation and spelling of the former is much easier than the latter and, therefore, is preferred here) - when it comes to the state of homebuilding in the U.S., no one seems to have much of the stuff anymore.

Even the economists are down on housing now, though credit must be given to the economists where credit is due...

Housing data from the Commerce Department was released earlier today and, according to a Wall Street Journal report($), a survey of 25 economists had produced a median estimate of 1.474 million housing starts in May.

The report from the Census Bureau showed exactly 1.474 million!

Very good!

Predicting the future course of homebuilding one-month out appears to be much less error prone than seeing the longer term picture. The dismal set has been woefully inept at longer term forecasting for more than a year now though they do seem to have ratcheted their expectations down lately.

A contrary indicator? No, in this case, probably not.

Housing starts decreased 2.1 percent to a seasonally adjusted annualized rate of 1.474 million in May after a downwardly revised (surprise!) total of 1.506 in April. On a year-over-year basis, housing starts are now down 24 percent.

Housing permits, an advance indication of future homebuilding activity, rebounded 3.0 percent in May to an annual rate of 1.501 million after an upwardly revised total of 1.457 million in April. Unfortunately, permits for single-family homes just hit a ten-year low.


Today's construction data comes after yesterday's dismal report on homebuilder confidence that just reached a 16-year low.

Just how bad is the mood right now? Let's ask the economists.

David Seiders, chief economist at the National Association of Homebuilders:

Home sales most likely will erode somewhat further in the months ahead, and improvements in housing starts probably will not be recorded until early next year

An unidentified researcher at Goldman Sachs:

Housing's woes seem far from over

From a Bloomberg report, Joshua Shapiro, chief economist at Maria Fiorini Ramirez:

There is way too much supply. If you're a homebuilder with inventory, the market is skewed against you.

And Mr. Seiders again:

Builders are really worried now, not only by the credit tightening in the mortgage market, but now all of a sudden by an increase in the fundamental mortgages as well.

From a MarketWatch report, Richard Moody, chief economist for Mission Residential:

The data seem eerily calm. Simply put, there is too much inventory lingering in the market, and the most recent data suggesting rapid growth in the number of foreclosures mean the inventory overhang will become more severe, particularly with higher mortgage rates taking a bigger bite out of demand.

Some sanguinity prevailed, however, in one Ken Mayland, chief economist for ClearView Economics:

We are making progress toward the point where housing can be said to be 'stabilizing'.

But, not much.