The latest housing starts data from the U.S. Commerce Department is sobering.
Both the production of single-family homes and new building permits fell by double digits in December, reaching a record low, the government said. Housing starts fell 15.5% compared to the previous month.
The weakening economy, which sprung from the real estate crisis, is now making the housing problems even worse. And the construction slowdown, in turn, is contributing to the economic malaise.
This is not only bad news for construction workers. New homes keep materials manufacturers and suppliers, plumbers, and electricians in business.
Obama’s plan to jump start the economy with infrastructure projects could help fill the void. But it’s not going to help homebuilders who can’t compete with the growing number of low-priced bank-owned properties.
“Builders are addressing the supply issue,” National Association of Home Builders Chief Economist David Crowe said in a news release today. “Washington policymakers must now act to boost the demand side of the equation by including a robust home buyer tax credit and mortgage rate buy down in the stimulus package that is moving through Congress.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.