Housing Starts plummeted today to the lowest level in 6 years, as builders continue to work out from under a massively bloated inventory of unsold property.
September starts were also revised downwards by 16%, from 5.9 to 4.9%.
The WSJ observed:
"The slowdown in housing this year stands in stark
contrast to the past five years, when the lowest mortgage rates in four
decades had powered a housing boom that pushed sales of both new and
existing homes to five consecutive records.
In a sign that starts will likely continue to fall,
October building permits dropped 6.3% to an annual rate of 1.535
million; the last month permits rose was January. Economists expected
permits would be up by 0.1% to 1.640 million. Permits decreased a
revised 5.2% last month to 1.638 million, compared with an earlier
estimated 6.3% drop to 1.619 million.
The housing weakness trimmed a full percentage point off economic
growth in the July-September quarter, when the economy expanded at a
tepid 1.6% rate. Housing is expected to continue acting as a drag over
the next year but analysts believe the adverse effects of falling sales
and construction cutbacks will not be enough to pull the country into a
The October 06 Housing Starts were the weakest
since July 2000, with Starts down 27% from the same period a year ago.
At present, the Housing situation will exert a much greater drag on Q4 GDP — even more of a drag than the negative 1.1% of Q3.
Bloomberg quoted Phillip Neuhart, an economist at Wachovia, who said: "This is a shocking number. The market is going to remain weak well into next year.”
New Residential Construction
New Home-Building Activity Falls to Lowest Level in 6 Years
WSJ, November 17, 2006 9:17 a.m.
U.S. October Housing Starts Drop to Six-Year Low
Bloomberg, Nov. 17