In May 2010, residential construction starts have slowed to their lowest level in a year. However, the slowdown was anticipated as home buyer's rushed to take advantage of the expiring tax credits offered up by the government. Those who may have delayed purchasing till later, purchased sooner to take advantage of the $6,500 repeat buyer and $8,000 first-time buyer tax credits.
Overall housing starts dropped 10% from April, while building permits fell 5.9% as reported by the Commerce Department. The single-family sector took the biggest hit in starts, down a whopping 17.2% from April. Nevertheless, permits (+4.4%) and starts (+7.8%) were both up from a year ago.
Home buyers should not be discouraged or weary about purchasing new homes because of the drops. The lower numbers were expected as many made the decisions sooner weighing in the financial benefit of doing so. In addition, new home sales jumped almost 27% nationally in March! New home sales will pick up again and level out to "normal." Summer is an active time for real estate and we should see some stimulation in the coming months.
So you see, there is nothing to worry about citizens. Put your minds at ease because all is well with the housing market. If you need something to stress about perhaps you should think about the Gulf oil spill, Arizona's immigration law under attack, exploding Toyotas, a 6-month moratorium on drilling driving gas prices to $8/gallon, my iPhone being outdated after one year of ownership, LeBron James leaving Cleveland, people living in the Gulf relying on the body of water are unable to make money, Michael Jackson's estate making $1 billion since he died one year ago, United States in the World Cup, millionaires increased spending on yachts and jewelry in 2009, Joran Van Der Sloot getting marriage proposals (?!), unemployment decreased in seven states, unemployment increased in 27 states, rebuilding Haiti, Gary Coleman's ex-wife exploiting his death, hurricanes hitting the Gulf, Jesse James moving to Austin to stalk Sandra Bullock, how sweet the Detroit Lions will be this year, and me crying myself to sleep because my wife has been gone for 2.5 weeks now.
Think about all of that and continue to buy houses. Historically, it's one of the safest investments you can make, but that doesn't mean it's invincible. Eventually, the curve will trend upward and you'll be glad you bought now when interest rates and prices are still low.