New U.S. housing starts in October unexpectedly fell to their lowest level in six months, weighed down by a sharp decline in new construction. Despite or perhaps “to spite” expectations for 600,000 new units, housing starts dropped 10.6 percent to a seasonally adjusted annual rate of 529,000 units, the lowest level since April and the percentage drop was the biggest since January.

Dan Alpert of Westwood Capital tells Tech Ticker that house prices are still too expensive with the large supply of new and old houses:

USA Today reports the medium home price in California was up 7%:

The median home price in California jumped 7% last month from May, as life began to return to the long-sluggish market for high-end homes, a tracking firm said Thursday.

and Calculated Risk reports that housing starts were up:

Privately-owned housing starts in June were at a seasonally adjusted annual rate of 582,000. This is 3.6 percent (±11.3%)* above the revised May estimate of 562,000, but is 46.0 percent (±4.3%) below the June 2008 rate of 1,078,000.

Good news all around, unless one looks for the rest of the story.  Notice the housing starts change was a range of from -7.7% to +14.9%. Hard to find much certainty in that.  Housing starts might be up.  Then, again they might be down…  As far as the medium home price goes, remember that “those who know” have been forecasting that bigger houses were entering foreclosure so that the median home price is expected to rise from that alone – and that’s bad, not good.  Mark Hanson also adds:

Remember, volume precedes price. Mid-to-high end sellers remain unrealistic about the values of their properties — likely because so many owe so much more than the homes are worth. But those with equity that are ok with the past 20-years of price appreciation or who know that they can steal a home in another area are accepting offers this selling season far below list prices. Others are opting for short-sales to which the banks are warming up. With rates down and prices down finally, two years of pent up demand in the mid-to-high end market is manifesting in more transactions. This is having the effect of pushing up median prices.

Don’t get too excited about housing yet…

The release that housing starts leaped 17% was initially viewed as optimistic by the CNBC slaves to the FED.  But new information that the number was a result of builders trying to qualify for government handout has even the CNBC folks backpeddling:

“But analyst Ivy Zelman gave me a huge nugget: 50 percent of sales in May were on spec. She says we’re seeing a lot of spec homes now because, “today’s consumer wants to touch and feel the house.” The positives are that cancellations are down, sales are better and there’s less negative pricing, although discounts are still prevalent. “The patient was without a pulse in the fourth quarter,” Zelman notes, “and now the patient’s in ICU.”

So why all the spec now? Because builders are trying to jam all these homes into buyers’ pockets before the expiration of the $8000 first time home buyer tax credit. It turns into a pumpkin November 30th.”

Diana Olick, CNBC Real Estate Reporter apologizes:” I’m not trying to be a bear here, just a pragmatist.”  

From  RGE Monitor:

“Feb 2009: Starts rose unexpectedly by 22.2% m/m to an annual rate of 583,000, led by a surge in the multifamily component, but are down 47.3% y/y and 74% below their peak in January 2006. This first gain in eight months defies weak fundamentals and is likely to be due to seasonal factors. Building permits, a indicator of future construction rose slower at 3.0% m/m, indicating that starts might ease further in the future. Completions rose 2.3% m/m and were down 37.3% y/y. “