Homebuilders Regroup After Miserable 2010

Look for fewer new home starts in 2011 as fears of a double dip in prices mount and builders lick their wounds from last year, which was the “worst year ever” for new home sales, according to the chief economist at the National Association of Home Builders.

“Seven of the 11 months for which we have data set new all-time lows” for sales, Crowe told National Mortgage News yesterday.

Despite the homebuyer tax credit, for the first 11 months of 2010, builders sold just 348,000 houses compared to 485,000 in 2008 and 374,000 in 2010. Actual sales in November totaled just 21,000 units.

Despite slumping sales, builders started more new homes last year than in 2009. Single-family housing starts rose 6.9 percent in November to a 465,000 unit seasonally adjusted annual rate. At the same time, single-family permit activity, a harbinger of future construction, was up 3 percent to a rate of 416,000 units, the highest level since June.

Fears that home prices will continue to fall over the next several months as the result of the most recent price reports (CoreLogic today reported November prices fell 5.1 percent, the fourth straight month of declines) could put a damper on starts. Despite recent signs of recovery in the general economy. Many economists are predicting a further decline in prices during the first half of the year, driving the real estate economy to a “double dip” in home values.