Housing starts see biggest drop since 1984

WASHINGTON Wed Mar 16, 2011 9:55am EDT

A construction worker works on one of a number of new single family homes in a subdivision outside San Diego as building returns to San Marcos, California March 8, 2010. REUTERS/Mike Blake

A construction worker works on one of a number of new single family homes in a subdivision outside San Diego as building returns to San Marcos, California March 8, 2010.

Credit: Reuters/Mike Blake

WASHINGTON (Reuters) - Housing starts posted their biggest decline in 27 years in February while building permits dropped to their lowest level on record, suggesting the beleaguered real estate sector has yet to rebound from its deepest slump in modern history.

Groundbreaking on new construction dropped 22.5 percent last month to an annual rate of 479,000 units, according to Commerce Department data released on Wednesday. This was just above a record low set in April 2009 and way below the estimates of economists, who had been looking for a smaller drop to 570,000.

January's figure was revised up to 618,000 units from 596,000. But that did not change the tenor of the report, which confirmed that the sector is failing to recover despite interest rates near record lows.

Building permits, a hint of future construction demand, fell to a record low of 517,000 units from a revised 563,000, and were down by about 20 percent from levels seen in February 2010.

Housing was at the epicenter of the financial crisis of 2007-2009.

One key impediment to the sector's recovery is a vast backlog of unsold inventory, while a shaky job market has also made consumers reluctant to embark on any major new financial commitments. Making matters worse, a glut of foreclosures, stalled in recent months by revelations of improper loan documentation, is depressing the market.

(Reporting by Pedro Nicolaci da Costa, Editing by Chizu Nomiyama)

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Comments (2)
DrJJJJ wrote:
Perhaps there’s some good news: when you almost stop building for this long, there’s bound to be some pent up demand eventually that drives prices up! We can’t all live in aptartment forever! Please thank your local progressive for wanting to make home ownership more accessible for the masses-in the interest of fairness and equality, let’s give homes away!!

Mar 16, 2011 11:00am EDT  --  Report as abuse
fromthecenter wrote:
Local Progressives did all this? They played a part, but I think you must be forgetting that G.W. speech where he was pushing it. And the fact that mortgage companies would provide loans based on nothing more then a signature and then selling them to one fund or another until the owner had no idea who he was or was not writing a check too. Oh, and dont forget all those lovely apr deals and the small print on them.

Mar 17, 2011 4:35am EDT  --  Report as abuse
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