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New construction of single-family homes in November fell to its weakest pace in 16 years, as builders cut back construction amid a growing supply of unsold homes, the U.S. Commerce Department announced Tuesday.Single-family homes starts fell 5.4% in November to a seasonally-adjusted rate of 829,000, the Commerce Department said. Total starts, which include multifamily units, fell 3.7% in November, to 1.19 million units, but came in higher than the 1.17 million consensus estimate.
Meanwhile, building permits, which are a sign of future construction and one measure of housing strength/weakness, fell 1.5% to an annualized rate of 1.15, in-line with the 1.15 million consensus estimate. Single-family permits 5.6% to an annualized rate of 764,000: single-family permits are down 34% in the past year, the largest 12-month decline since 2001.
Cautious builders
Economist Steve Affinito told BloggingStocks Tuesday that the report wasn't surprising.
"There were no surprise. It shows a cautious building industry that's cutting back construction given the huge supply of unsold homes," Affinito said. "Builders know that if they build a home on speculation, it could sit there for a year or two, or even longer, and that's not what builders want, so they're cutting back."
The regional breakdown of housing starts: Northeast, down 16%; West, down 6.9%; Midwest, down 1.5%; South, up 0.3%.
Affinito added that the report, "clearly shows a housing recession, and one that's far from over." Affinito added that he does not expect a meaningful recovery to begin in the U.S until at least Q4 2008/Q1 2009 at the earliest.
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