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Housing starts posted a small gain in January 2008, but remained near two-decade lows, a sign the nation's worst housing slump is far from over. Housing starts increased 0.8% in January 2008 to a seasonally-adjusted annual rate of 1.01 million, in-line with the consensus estimate, the U.S. Commerce Department announced Wednesday. In December 2007, starts declined by a revised 14.8% to an annual rate of 1 million.
In January 2008, building permits declined 3.0%, single family housing starts fell 5.2%, and multi-unit housing starts plunged 22.3%.
Economist Steve Affinito told BloggingStocks Wednesday the January 2008 housing report still shows a housing sector in deep recession.
"The most telling stats in today's report are the substantial drops in both building permits and single family housing starts, and they reflect the large inventory conditions in the housing sector," Affinito said. "We have a large inventory of homes -- roughly a nine-month supply -- that will continue to weigh on house prices and the economy for at least all of 2008, and most likely into 2009."
During 2007, construction started on 1.355 million housing units, the lowest total since 1993, and down 25% from the previous year. Home builders are unlikely to increase building until they see the large inventory of unsold homes decline for several months, and home foreclosures decline as well, Affinito said.
By region, housing starts rose in the Northeast, up 18.9%, and in the Midwest, up 12%. They fell in the South, -2.9%, and in the West, -6.2%.
Affinito added that he now expects the slumping housing sector to lower 2008 U.S. GDP by about 1.0-1.2 percentage points from what the nation's GDP growth rate would be if the housing sector was healthy.
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Reader Comments (Page 1 of 1)
2-20-2008 @ 10:53AM
AJGORM said...
The Fed has cut its key interest rate to 3% from 5.25% in September,
and some economists have suggested that further rate cuts are needed
to boost the economy and end its current struggles. At this point we
need to wonder how low and how long do we need to wait in order to get mortgage
rates to drop. We need cuts on mortgages - not foreign made goods. Overall
home prices have fallen faster and cost more to the American public than its worth keeping these banks solvent over consumer debt.
Americans need relief from housing debt so we can pay the consumer
debt. America is going bankrupt over housing debt.
We can not wait for this to happen. One can only guess that rate
cuts are keeping the banking industry from going broke. Banks set
their own rate for housing at an unacceptable pace this is causing
more and more hardship and a deeper problem. Get off the chair and
drop rates or get a new bank system that banks for America..
2-20-2008 @ 12:03PM
AJGORM said...
I can honestly say that when we realize that the mortgage home loan industry needs more regulation than any other form of debt we will begin to repair our ability to pay consumer debt. We need separation of the two industries,. Mortgage is our backbone and the credit industry is robbing us blind for it. We need our government to back American housing not foreign debt. Much better ways to give our residences rebates to those that make our American dream come true. I for one know that if I could pay less mortgage taxes and interest I could pay my credit card debt and support big business two winners no losers.