According to the Commerce Department, housing starts for the month of October fell 4.5%, to a seasonally-adjusted annual rate of 791,000, the lowest level on record. The number was actually above expectations, if you can believe that, as projections were for a decline of 5.8%, to 780,000. In the past year, housing starts have fallen by about 38% and are down about 65% from the peak seen early in 2006.
Building permits, an indicator of future construction, also fell sharply, by 12%, to a record low of 708,000 annualized units. Permits for single-family homes, considered by many analysts as the most important figure in the report, fell 14.5% to 460,000, the slowest in 26 years. Building permits are down 40% in the past year.
Builders are frantically cutting back their production of new homes, trying to work off a mammoth glut of unsold inventory. The more builders cut production, the sooner the market can recover.
New construction on single-family homes fell by 3.3% for the month, to an annualized rate of 531,000. Construction on buildings with 5 units or more, one of the few positives in the report for the past few months, also fell, by 5.7%, in a sign that rental properties may not be in demand anymore.
Regionally, total starts fell by 31% in the Northeast and 13.7% in the Midwest. Surprisingly, starts made a gain in the South and in the West, the hotbeds for the housing over-exuberance that has occurred. Starts rose 1.5% in the South, complementing a gain of 7.5% in the West.
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