U.S. housing starts, permits hit record lows
The U.S. housing market hit two milestones in October — but of the decidedly wrong kind, according to data released Wednesday.
American housing starts dropped 4.5 per cent in the month, falling to an annualized level of 791,000, the lowest number since the U.S. Commerce Department started keeping records on this economic indicator in 1959.
As well, the number of U.S. building permits, an indicator of future house construction, also plunged to a 23-year low at 708,000, down a hefty 12 per cent in October compared to September. That represented the worst reading for this category since March 1975.
Both figures were released by the Commerce Department.
All signs point downEconomists had little positive to say about the most recent figures.
"Building permits were much weaker than expected, slumping 12 per cent to 708,000 and pointing to further weakening in construction activity," said Dawn Desjardins, assistant chief economist with RBC Economics Research.
The tumbling U.S. home market, beset by falling consumer confidence, a tightening market for mortgage credit and slumping employment prospects, is setting all sorts of negative records.
On Tuesday, the National Association of Home Builders/Wells Fargo Bank survey of homebuilders showed confidence in the housing construction sector at an all-time low, falling to nine. That was the lowest reading for this arcane bit of economic data since they began measuring builder confidence in 1985.
The survey number is an index calculation and anything below 50 means more builders have a negative outlook concerning the sector's economic prospects than hold a positive opinion.
Even housing experts are at the point where they cannot predict a bottom for the housing market.
"It turns out I haven't been pessimistic enough. The negative feedback from bank credit losses, tighter credit conditions and worsening economy have been more difficult to overcome than I expected," said Scott Anderson, senior economist with Wells Fargo Bank in a November commentary on the housing market.
Anderson, a well-known expert in the U.S. housing market, had expected housing starts to hit 813,000 and building permits to reach 798,000.
Prices downAs well, the National Association of Realtors said on Tuesday that housing prices fell by a record nine per cent in the third quarter of the year, to $200,500 US, compared to the same quarter last year.
By way of comparison, homes in Canada sold for almost $290,000 in September, down 5.4 per cent compared to $309,000 for the same month last year.
Worse still, as much as 40 per cent of the sales in the three months were distress sales, mainly banks selling repossessed homes. That factor tends to put pressure on prices to drop further rather than provide a bottom below which prices will not fall.
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