Washington, DC, February 16, 2007—Housing starts fell to their lowest point in nearly a decade in January, as housing starts plunged 14.3% to a seasonally adjusted annual rate of 1.408 million, the Commerce Department reported Friday.
Building permits dropped 2.8% to 1.568 million in January, 28.6% below the same month a year ago.
The starts figure was much lower than expected on Wall Street, where economists were looking for a 2% drop to 1.60 million annualized units. The permits figure was close to the 1.58 million expected by median forecast.
The stunning drop in home building indicates that builders are scaling back their plans on a massive scale to work down the excess inventory of unsold homes on the market. Hopes that a bottom in the housing market has been reached will have to be re-evaluated.
Starts of single-family homes dropped 11.2% to a seasonally adjusted annual rate of 1.108 million, the lowest since August 1997. Permits for single-family homes fell 4% to 1.121 million, the lowest since December 1997.
Starts of multifamily units fell 24%, while permits for multifamily units rose 0.4%
Starts fell in three of the four regions in January. Starts rose about 9% in the Northeast, which enjoyed warmer and drier than normal weather in the first half of the month. Starts fell 28% in the West, 15% in the Midwest and 12% in the South. Starts in the Midwest were at the lowest level since 1991. Starts in the West fell to the lowest level since 1996. It was the biggest drop in the West since 1979.
Completions of new homes fell 1.2% to a seasonally adjusted annual rate of 1.88 million, an indication that a significant amount of new supply is still hitting the market. It takes about 6 months for a home to go from groundbreaking to completion.
There were 1.2 million homes under construction in January, down 14% from the previous January.
