Bad news keeps coming: Housing starts hit record low

Posted by: Prashant Gopal on January 22, 2009

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.”

Reader Comments

mark

January 23, 2009 8:36 PM

that is GOOD news sir. we are much closer to the bottom once they stop building and the supply is absorbed.
Buyers wont enter the market if the market is full of supply.

Daniel Swanson

January 24, 2009 7:26 AM

You have everything backwards. The housing crash is merely a symptom of the underlying problem. In order to understand the actual problem, you have to understand the physics Industrial Man's energy system. We are becoming far less wealthy, and this loss of wealth is causing many problems including the eventual loss of value of all Industrial Era hardware, and collapse of all Exponential growth Fiat money systems. http://www.energystrain.com

Seattle washington real estate

January 25, 2009 1:13 AM

The demand for housing sector has touched the lowest ebb and consequently construction work has also suffered. However, Obama's policy of addressing the economic problems are quite encouraging and bring the ray of hope for the infrastructure sector which is under severe strain and jeopardy.

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About

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.

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