WASHINGTON (Reuters) - New housing starts and permits plunged to record lows in November, as long-standing problems in the housing market continued to weigh on the U.S. economy, a Commerce Department report showed on Tuesday.
Housing starts fell 18.9 percent to a seasonally adjusted annual rate of 625,000 units from 771,000 units in October. That was much less than the 740,000 starts Wall Street analysts expected for November.
New building permits, which give a sense of future home construction, plummeted 15.6 percent to 616,000 units from 730,000 units in October. That was also much below Wall Street analyst estimates of 700,000.
The Commerce Department began keeping monthly records for building permits in 1960, and for housing starts in 1959.
Housing starts were down 47 percent in November from the rate in November 2007 and permits down 48.1 percent. Both were the largest year-to-year drops since January 1991.
“The housing starts data is another bad sign for the overall U.S. outlook. There’s zero sign of any stabilization, dashing what had been some optimism that we were perhaps bottoming out,” said Brian Dolan, chief currency strategist with Forex.com in Bedminster, New Jersey.
Single-family homes, which make up the bulk of new home construction, were hit hard in November. New starts fell 16.9 percent from October to a 441,000 unit rate, a record low. Permits fell 12.3 percent to 412,000 unit rate, the lowest since November 1981.
However, in the long run, the slump in new home construction could help U.S. housing market prices recover.
“The more we have less housing starts, the more we can shrink existing inventory,” said Steven Goldman, market strategist at Weeden & Co. in Greenwich, Connecticut.
Yields on 30-year U.S. Treasury bonds dropped to record lows after release of the housing data and a separate Labor Department report showing U.S. consumer prices plunged at a record rate for a second straight month.
The U.S. dollar turned negative versus the euro, while U.S. equity index futures were steady at higher levels.
Reporting by Doug Palmer and by the New York Treasuries Desk, Editing by Neil Stempleman
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