As we say every month, eventually housing starts should go to somewhere around zero, since we don’t actually need any new houses. So we’re glad to see that housing starts were crushed again in January, registering a decrease of 16.6%.
WSJ: Economists surveyed by Dow Jones Newswires forecast a 4.9% drop to an annual rate of 523,000. The level of 466,000 was a new record low. The last time starts rose was June 2008.
Year over year, housing starts were 56.2% below the pace of construction in January 2008.
Builders have little incentive to put up new homes, with the level of unsold homes so high during a recession. Bloated inventory is driving down prices. Falling prices are undercutting demand. Companies seeing revenues tumble and profit margins shrivel have been slashing payrolls, and the rising tide of layoffs is scaring people into saving money and passing up on big purchases, like buying a home. Also, credit has become harder to secure, with lenders tightening their standards.
Building permits in January decreased 4.8% to a 521,000 annual rate.
Obama is set to unveil his housing “fix” today.
Update: Here’s a note from Ian Shepherdson at High Frequency Econ, offering some numbers beyind the numbers:
The huge drop in starts reflects a 28% plunge in the very volat-
ile multi-family home sector, while single-family starts fell by
12% – grim but not quite as bad as the headline. Moreover, it is
possible that severe weather in parts of the country accounted
for some of the drop in starts. We note that single-family perm-
its, which are much less susceptible to the weather than starts,
fell 8.0%, rather less than the drop in starts. The numbers are
still terrible, though, and with the inventory of new homes sti-
ll rising relative to sales, we can’t be confident this is the
bottom. Starts can’t fall below zero, though…