Thursday January 22, 02:42 PM
US housing starts, permits fall to new lows in December
 |
WASHINGTON (AFP) - US housing starts and building permits tumbled in December to half-century lows amid a deepening housing crisis and recession, government data showed Thursday.
The Commerce Department said the number of housing starts plunged 15.5 percent in December from November to an annualized rate of 550,000 units.
It was the third consecutive monthly drop in starts as the construction sector retrenched in the face of rising unemployment and tight financing conditions despite unprecedented government measures to break the credit crunch.
Housing starts in December were 45.0 percent below the year-ago level, the department said.
Permits to build new homes, an indicator of future activity in the housing sector, dropped 10.7 percent from the prior month to an annualized rate of 549,000.
The sharp drop in housing starts outstripped most analysts' forecasts of 610,000, while the permits decline was not as bad as the 615,000 forecasted.
The December numbers showed the growing depth of a year-old recesssion, linked to the collapse of the housing market in 2006 that triggered the global financial crisis.
They were the lowest on record: Housing starts data were first published in January 1959, and permits data in January 1960.
Construction permits numbers fell steadily throughout 2008, with the exception of June.
For November, the Commerce Department upwardly revised the decline in permits to 15.8 percent from a prior estimate of 15.6 percent.
On a 12-month basis, permits were 50.6 percent below the December 2007 level.
"Today's report suggests that construction employment and activity will continue to decline rapidly for some time," said Gary Bigg, a Bank of America (NYSE: IKJ - news) analyst.
"With a variety of headwinds facing the housing industry -- rising unemployment and tight credit among them -- a recovery in construction activity is not expected until mid-2009 at the earliest," he said.
Analysts said the report bodes ill for fourth-quarter residential investment.
"Housing starts surprised downward, leading us to mark down our forecast for residential investment in the fourth quarter," Elsa Dargent of Natixis (Paris: FR0000120685 - news) said.
"As a result, we think GDP (gross domestic product) is more likely to decrease by 5.6 percent in the fourth quarter -- versus 5.4 percent initially forecast."
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
