New Home Starts Hit Lowest Level Ever
The slouching economy forced U.S. home builders to slash construction of new homes in November, well below the worst levels seen in 50 years, according to a joint announcement Tuesday from the U.S. Census Bureau and the Department of Housing and Urban Development. New construction starts plunged a steep 18.9 percent, as builders threw in the proverbial towel on a housing market facing no near-term prospects for recover -- the sharpest such monthly percentage drop since March 1984, when housing starts declined 26 percent. Starts fell to a seasonally adjusted annual rate of 625,000, the lowest rate on the books since the Commerce Department began tracking records in 1959. Starts of single-family homes also posted a record low, dropping 16.9 percent to a seasonally-adjusted annual rate estimate of 441,000 during November. Housing structures with five-plus units fell 26.9 percent in October to 166,000, the Commerce Dept. said. Permits, which some economists suggest is a less volatile measure of new construction, also fell 15.6 percent in November to a seasonally-adjusted annual rate of 616,000, a record. Privately-owned housing completions actually rose 3.3 percent from October and posted seasonally adjusted annual rate of 1,084,000 -- notably, completions remain well above starts, meaning that builders are continuing to put inventory on the market while they pull back on starting new inventory. Housing starts have now fallen 47 percent in the past year, and a monstrous excess of inventory continues to haunt home builders, despite a steady pullback in building activity. On Monday, the National Association of Home Builders said its builder sentiment index held at an all time low in December. “The crisis continues,” said NAHB chairman Sandy Dunn, according to an NAHB press release. "While builders are doing everything we can in the way of price and non-price incentives to move new homes off the books, buyers are afraid to move forward, and in any case there is almost no way to compete with the cut-rate product that is continually flooding the market from mounting foreclosures." Critics, of course, will argue that builders helped dig their own graves by overbuilding in the face of clearly waning demand in late 2006. Not that we're necessarily critics here at HW, or anything. Write to Kelly Curran at email@example.com.