Filed under: Bad news, Economic data, Housing, Recession
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’ll 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 big inventory of unsold homes decline for several months, and home foreclosures decline as well, Affinito stated.
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 anticipates 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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