Coming in lower than already-low expectations, the Commerce Department said Thursday morning that housing starts in December dropped 14 percent:
Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,006,000. This is 14.2 percent (±8.3%) below the revised November estimate of 1,173,000 and is 38.2 percent (±4.9%) below the revised December 2006 rate of 1,629,000. Single-family housing starts in December were at a rate of 794,000; this is 2.9 percent (±8.7)* below the November figure of 818,000.
The number of December starts was the worst since 1991. Total starts for 2007 were an estimated 1.354 million, the Commerce Department reported -- a 24 percent drop from 2006, and the worst year for housing starts in nearly 30 years. It's worth noting that November's starts saw a downward revision, as is common; the revised estimate of 1.173 million is lower than the 1.187 million reported orginally last month. Bloomberg reported that December starts managed to be worse than economists had predicted; a survey by the news organization found that the median expectation was for starts to fall to a 1.145 million pace. Permits also dropped, falling 8.1 percent to 1.068 million, the Commerce Department said. Update: The Associated Press penned an article that made an interesting point: the 2007 decline in total starts is the "second biggest annual decline on record, exceeded only by a 26 percent plunge in 1980, a period when the Federal Reserve was pushing interest rates to post-World War II records in an effort to combat an entrenched inflation problem." We're clearly in uncharted territory now. Interest rates are not high, as was the case in the early 1980s, but extremely low.