U.S. housing permits, starts hit record lows

House construction in the United States has slumped to its lowest point in almost 40 years, according to new numbers released Thursday.

The U.S. Commerce Department said national housing starts and new building permits in December shrank to their lowest level since the department began tracking these statistics in 1959.

Housing starts — the number of units that were getting built — dropped 15.5 per cent in the last month of the year compared with November. When the monthly level is grossed up for a full year, December's figures implied that American home builders were putting up 550,000 structures.

By way of comparison, the Commerce Department estimated that, for the full 2008, housing starts were 904,300. And that figure was already awful, down 33 per cent compared with 2007.

Analysts had expected the starts figure — a measure of confidence among home buyers and potential future economic activity — to be more than 10 per cent higher, at 610,000.

"Despite the unexpectedly large 18.9% slide in housing starts in November to an annualized 625,000, the advance information for December is not suggesting any imminent turnaround," said Paul Ferley, assistant chief economist at RBC Economics Research prior to the release of the new figures.

In fact, the latest start numbers were more than 12 per cent lower than what Ferley had expected.

Permits plunge

U.S. building permits — official permission to construct new units — also fell to its lowest point since the Commerce Department begin watching the numbers.

In December, permits tumbled 10.7 per cent versus November, at an annualized rate of 549,000. For all of 2008, house permits dropped to 892,500, down 36 per cent versus the previous years.

The results, depressing as they are for the housing industry, probably do not come as any surprise.

The U.S. home market has collapsed as a result of risky financing combined with a slowing economy.

As a result, American foreclosures were 81 per cent higher in 2008 than the same number one year earlier, and an impressive 225 per cent higher than 2006, according to a study by RealtyTrac, which watches U.S. foreclosure data.