Housing Starts Fall to Nearly 10-Year Low
U.S. housing starts plunged in January to their slowest pace in more than nine years, CNN Money reports this morning, as the latest government reading on the battered housing market came in weaker than forecasted.
New homes started in January fell by 14.3 percent to an annual rate of 1.41 million from the 1.64 million pace in December, the U.S. Census Bureau reported Friday.
Economists surveyed by Briefing.com had forecast a 1.6 million rate for January. The last time starts fell to this slow a pace was August 1997.
The number is not only well below the December pace, but it is 22 percent below the average for all of 2006, when the housing bubble was already slowing down, and about 32 percent below the record pace of 2005.
Applications for new home permits, which is generally viewed as a measure of builders’ confidence in the market, fell 2.8 percent to an annual 1.57 million rate from 1.61 million a month earlier, which was a bit below the economists’ more positive forecast of a 1.59 million pace.
The housing permit reading was helped by a second straight month of strong permit application for buildings with five or more units. The number of permits for single-family homes fell by 4 percent to a six-year low, even as home mortgage loan rates remain relatively affordable.
The one piece of good news in the report is it could help cut down on the glut of homes available for sale on the market, which has been pushing down prices for both new and existing homes. But it also suggests that home builders aren’t seeing the stabilization in the housing market that some economists had been looking for.
The housing sector hit a severe slump in 2006 after a record building boom in 2005 left a glut of homes available for sale on the market, pushing down the demand for home mortgages and home prices.
Thursday, the National Association of Realtors reported a deep, widespread decline in home prices on record during the fourth quarter.
But other recent readings have also suggested a more recent stabilization in the battered real estate market. A National Association of Home Builders survey of its members, released Thursday, showed home builder confidence at its highest level since June, although the builders surveyed still saw the market as a weak one.
The nation’s leading home builders have all reported declining sales and prices for new homes, due greatly to the glut of inventory available for sale on the market. KB Homes reported a net loss of $49.6 million, or 64 cents per share, for the fiscal fourth quarter ending November 30.
How this plays into experts’ forecasts for the cost of home loans, and the impact of mortgage demand on the 2007 housing market, remains to be seen.
SOURCE: CNN Money