Deep, dark hole for new home construction
US housing starts fell below 500,000 for the first time in 50 years of recordkeeping.
This construction project in Dellville, Pa., was one of only 466,000 new homes started in January, a 56 percent plunge from the same period a year ago, the Commerce Department reported Feb. 18.
Carolyn Kaster/AP
New home construction in the United States has fallen into a deep hole that may take months to recover from.
Housing starts plunged to a record 466,000 last month, the Commerce Department reported Wednesday. That was 16.8 percent below December's already low number (seasonally adjusted) and 56.2 percent below the total a year ago.
Four record lows
The figure marks the fourth month in a row that housing starts have hit a new low in 50 years of the department's recordkeeping. Until the current slide, no month had ever fallen below 798,000, which occurred during the recession of 1991, when the US population was 17 percent smaller than it is today.
"Conditions in the market for new homes have not been this bad since the 1930s, and they continue to worsen," writes Patrick Newport, an economist with IHS Global Insight in Lexington, Mass.
Future outlook gloomy
Building permits for new homes – an indicator of future construction – also hit a record low of 521,000 last month, the Commerce Department reported. That's down 4.8 percent from December's rate and 50.5 percent below January 2008.
Mr. Newport points to four factors that are delaying recovery: 1) fewer new households as people move in with friends or relatives, 2) falling prices for existing homes have priced new homes out of the market, 3) a credit crunch that has constrained builders, and 4) a recession that has dampened demand for new homes.