Home Construction Reaches 17-Year Low

Washington, DC, Oct. 17, 2008--Construction of new homes fell to a 17-year low in September as home builders sought to reduce the number of unsold homes.

Housing starts fell 6.3 percent in September to a seasonally adjusted annual rate of 817,000, the lowest since January 1991, the Commerce Department estimated Friday. Starts of single-family homes tumbled 12 percent to 544,000, the lowest since February 1982.

Housing starts were also revised lower in July and August. Starts in August were revised down to 872,000 from 895,000.

The September estimates were much worse than the 3 percent decline to an annual rate of 870,000 that was expected by economists.

Building permits fell 8.3 percent to 786,000, a 27-year low. Permits for single-family houses fell 3.8 percent to 532,000, the lowest in 26 years.

Builders are cutting back their production of new homes, trying to work off a huge supply of unsold inventory. Record foreclosures on existing homes are complicating the builders' efforts to bring supply back down to meet sluggish demand.

Housing starts were off 31 percent in the past year and were down more than 60 percent from the peak in early 2006. In the past year, permits for single-family homes have dropped 39 percent, single-family starts have fallen 42 percent, and single-family completions have sunk 27 percent.
 
Starts of single-family houses dropped to the lowest level in at least 20 years in three of the four regions.