Local housing starts are down and national homes sales are up, two positive indications the housing market may be bottoming out from its three-year dive..
The Census Bureau reports fewer building permits for new construction were issued in the metro Atlanta area in June, compared to May and the same period last year. The slowdown is a critical step clearing out the oversaturated housing market, said Eugene James, division director for MetroStudy in Atlanta.
“It’s not good for the job market because it impacts construction jobs but it really is good for the region, in terms of reducing inventory,” he said. “We’ve got to get rid of what we have before we start building more.”
The Bureau reported a 22 percent drop in permits for new construction issued between May and June and a 70 percent drop year-over-year.
Across the country, the Commerce Department said home sales are up a surprising 11 percent over May. Local analysts, including James, expect Atlanta’s numbers to show the same trend when released next month.
The rise in the national figure is the strongest sales pace since November 2008 and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 360,000 units. The last time sales rose so dramatically was in December 2000.
James called the numbers “refreshing.”
“We’ve been slowly showing signs for awhile now,” he said. “More people will see signs of recovery now, I think.”
Nationally, sales have risen for three straight months, according to the Commerce Department. The median sales price of $206,200, however, was down 12 percent from $234,300 a year earlier and down nearly 6 percent from $219,000 in May.
The report is another encouraging sign that the beleaguered housing sector is finally coming back to life. Last Thursday, the National Association of Realtors reported that home resales posted a monthly increase of 3.6 percent in June.
There were 281,000 new homes for sale at the end of June, down more than 4 percent from May. At the current sales pace, that represents 8.8 months of supply — the lowest level since October 2007.
Locally, James said the number of building permits will continue to decline as area home builders figure out how to proceed.
“Traditionally we’ve been a really large speculative market,” James said. “In other markets it has been more of a contract deal; you’re more or less selling dirt. But not here. I think there are some builders who are taking a look at having a pre-sale in hand before building.”
The Associated Press contributed to this article.