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Wow, I knew it was going to be bad, but I was not expecting this large of a percentage drop.
ECONOMIC REPORT
Housing starts plunge 17% to record low in January
At this rate, new construction will fall to zero by end of the year
By Rex Nutting, MarketWatch
Last update: 8:32 a.m. EST Feb. 18, 2009
WASHINGTON (MarketWatch) - The collapse in the housing industry accelerated in January, as construction on new U.S. housing units plunged 16.8% to a seasonally adjusted annual rate of 466,000, the Commerce Department reported Wednesday, far below the weakest levels of construction in the post-World War II era.
Housing starts have dropped at double-digit rates for three straight months. At this rate, starts would fall to zero by the end of the year.
Starts are down a record 56% in the past year and are down 79% from the peak three years ago.
The large declines in the past few months could be good news for the economy, on the principle that when you are in a hole, the first thing to do is to stop digging. Builders are trying to reduce their inventories of unsold homes as they face relentless competition from older homes thrown on the market by foreclosures or short-sales.
Later Wednesday, President Barack Obama will unveil his administration's plans to reduce the number of foreclosures.
Housing starts in January were much worse than expected by economists surveyed by MarketWatch, who looked for new construction to drop to a 525,000 annual rate.
Housing starts for single-family homes dropped 12.2% to a 347,000 seasonally adjusted annual rate, also a record low. Starts for multifamily buildings sank 25%.
Building permits, less volatile than the housing starts data, fell 4.8% to a seasonally adjusted annual rate of 521,000, also a record low, the government said. Permits for single-family homes fell 8% to a record low 335,000 annual rate.
Construction activity in the winter months can often be affected by local weather conditions, but construction was weak all across the country in January. Starts fell to record lows in three of four regions in January, while starts in the West dropped to the lowest level in 42 years.
The mood of home builders' has rarely been worse. The National Association of Home Builders reported Tuesday that its sentiment index inched up to 9 in February from a record-low 8 in January.
The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors. In most months, the government can't be sure whether starts increased or decreased. In xxxxxr, for instance, the standard error for starts was plus or minus 9%. Large revisions are common.
It can take four months for a new trend in housing starts to emerge from the data. In the past four months, housing starts have averaged 612,000 annualized, down from 702,000 in the four months ending in December.
Rex Nutting is Washington bureau chief of MarketWatch.
ECONOMIC REPORT
Housing starts plunge 17% to record low in January
At this rate, new construction will fall to zero by end of the year
By Rex Nutting, MarketWatch
Last update: 8:32 a.m. EST Feb. 18, 2009
WASHINGTON (MarketWatch) - The collapse in the housing industry accelerated in January, as construction on new U.S. housing units plunged 16.8% to a seasonally adjusted annual rate of 466,000, the Commerce Department reported Wednesday, far below the weakest levels of construction in the post-World War II era.
Housing starts have dropped at double-digit rates for three straight months. At this rate, starts would fall to zero by the end of the year.
Starts are down a record 56% in the past year and are down 79% from the peak three years ago.
The large declines in the past few months could be good news for the economy, on the principle that when you are in a hole, the first thing to do is to stop digging. Builders are trying to reduce their inventories of unsold homes as they face relentless competition from older homes thrown on the market by foreclosures or short-sales.
Later Wednesday, President Barack Obama will unveil his administration's plans to reduce the number of foreclosures.
Housing starts in January were much worse than expected by economists surveyed by MarketWatch, who looked for new construction to drop to a 525,000 annual rate.
Housing starts for single-family homes dropped 12.2% to a 347,000 seasonally adjusted annual rate, also a record low. Starts for multifamily buildings sank 25%.
Building permits, less volatile than the housing starts data, fell 4.8% to a seasonally adjusted annual rate of 521,000, also a record low, the government said. Permits for single-family homes fell 8% to a record low 335,000 annual rate.
Construction activity in the winter months can often be affected by local weather conditions, but construction was weak all across the country in January. Starts fell to record lows in three of four regions in January, while starts in the West dropped to the lowest level in 42 years.
The mood of home builders' has rarely been worse. The National Association of Home Builders reported Tuesday that its sentiment index inched up to 9 in February from a record-low 8 in January.
The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors. In most months, the government can't be sure whether starts increased or decreased. In xxxxxr, for instance, the standard error for starts was plus or minus 9%. Large revisions are common.
It can take four months for a new trend in housing starts to emerge from the data. In the past four months, housing starts have averaged 612,000 annualized, down from 702,000 in the four months ending in December.
Rex Nutting is Washington bureau chief of MarketWatch.
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