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Fewer home-building permits signal weakness ahead

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Applications for home-building permits, a gauge of future construction, fell in September by the largest amount in five months — a discouraging sign for the housing industry.

The decline, in part, reflected uncertainty about whether Congress will extend a tax credit for first-time homebuyers.

At the same time, the Commerce Department said Tuesday that construction of new homes and apartments rose 0.5 percent last month, to a seasonally adjusted annual rate of 590,000 units. That was a weaker showing than the 610,000 economists had expected.

The applications for building permits fell 1.2 percent in September. That's the biggest decline since a 2.5-percent drop in April and underscored worries that the fledgling housing revival could be derailed by rising unemployment, tighter bank lending standards and the expiration on Nov. 30 of the government's $8,000 tax credit for first-time homebuyers.

Housing has been struggling to recover this year following a steep collapse that helped pull the overall economy into the worst recession since the 1930s.

Real estate agents and homebuilders are lobbying Congress to extend the tax credit, an effort appears to be gaining momentum, but the administration is being vague about its position.

Sen. Johnny Isakson, R-Ga., who spent his career as a real estate agent before being elected to Congress, said "this market is going to die a sudden death" without an extension.

Isakson and Sen. Christopher Dodd, D-Conn., chairman of the Senate's banking committee, want to extend the credit until June 30 and to drop the requirement that the credit be available only to first-time buyers. That's estimated to cost $16.7 billion.

The lawmakers have suggested that their measure be attached to an extension of federal assistance to the millions in danger of exhausting unemployment insurance benefits.

Housing Secretary Shaun Donovan said at a congressional hearing Tuesday that supporting the housing market "can be very expensive, especially at a time of significant budget deficits."

The administration will make a recommendation on whether to extend the credit in the coming weeks, after studying data on tax filings from the Internal Revenue Service. While there would be some negative effects if it were allowed to expire, Donovan said, "I do not believe that a catastrophic decline would be the result."

Some analysts and lawmakers are skeptical about extending the credit, arguing that most homebuyers who receive it would have decided to buy anyway. And soaring unemployment is likely to dull the impact of any extension, Mark Vitner, a senior economist with Wells Fargo Securities, wrote in a note to clients.

"Many of the most likely buyers targeted have already taken advantage of the program," he wrote.

Meanwhile, the Labor Department said wholesale prices fell 0.6 percent last month on a drop in energy costs. Outside food and energy, core inflation fell 0.1 percent. In the 12 months ending in September, core wholesale prices rose a modest 1.8 percent.

The drop in wholesale prices was another sign the recession had kept a lid on inflation. Last week, the government said consumer prices edged up a modest 0.2 percent in September.

But the cost for a barrel of crude jumped $10 this month, hitting $75 for the first time in a year last week and than passing $80 early Tuesday. The value of the dollar plunged in October and because crude is bought and sold in the U.S. currency, international investors who can essentially buy more crude for less have rushed in to snap up oil contracts.

The 0.5-percent rise in overall housing construction in September followed a 1-percent drop in August that was revised down from an initial estimate of a 1.5-percent gain.

Construction of single-family homes rose 3.9 percent last month, to an annual rate of 501,000 units, reversing a 4.7-percent drop in August. Multifamily construction, a much smaller and more volatile segment, posted a 15.2-percent drop following a 20.7-percent rise in August.

Construction rose 7.1 percent in the South, but all other regions showed weakness. Building activity fell 5.5 percent in the Northeast, 1.8 percent in the Midwest and 8.8 percent in the West.

An index from the National Association Home Builders that measures builder confidence slipped slightly in October to a reading of 18, from 19 in September. Builders blamed the slippage on the approaching expiration of the homebuyer tax credit.

The industry contends that extending and expanding the credit for one year would generate nearly 350,0000 jobs and $11.6 billion in additional tax revenues.

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  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?

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