Permits for new home builds in the
The number of home building projects that were started in November also took a big hit, in yet another sign that there is no sign of an end to the slump in
Figures from the commerce department showed building permits - an indicator of the future health of the housing market - dropped by 1.5% to a rolling annual rate of 1.152m, the slowest since June 1993. The year-on-year decline was 24.6%.
Adding to the bleak set of data were housing starts which set an annual pace of 1.187m units, slightly better than the 1.180m unit pace Wall Street had forecast.
However, single-family home starts, which account for the bulk of home building projects, fell for the eighth straight month by 5.4% to an annual pace of 829,000 units, the lowest level since April 1991. This is a 24.2% fall on a year ago.
The midwest and north-east regions saw some of the biggest monthly falls with a 20% decline in single-family housing starts since October.
Adam York, an analyst at Wachovia Securities, said that these figures did not suggest that the fallout from the housing market would end soon.
"This is not a bottom here - we have returned almost to the levels we saw in September and we are still not looking for a bottom in starts until the middle of 2008, probably another 100,000 to 200,000 down from here."
Economists pointed out, however, that the bad numbers signalled a fall in total houses in the market which could help support prices . The current glut of housing on the market has put downward pressure on house prices at a time when demand is also weakening.
Steven Wieting, economist at Citigroup, said the most important factor now is how tighter lending conditions will affect house sales.
"The real question is sales. We have to get down to the issue of what sales will be like with these constraints on credit. The potential for this to be more widespread than just housing is there," Wieting said.
Analysts say the deteriorating housing market has held back economic growth for the
"The fourth quarter of GDP is going to have a substantial drag from the second leg down in construction, but the bright spot is that it's unlikely that we're going to see this rate of decline continue," said Michael Darda, chief economist at MKM Partners in Greenwich, Connecticut.
Source: The Guardian