MarketWatch: Record low for housing starts

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Housing starts plunge 17% to record low in January
By Rex Nutting, MarketWatch


WASHINGTON (MarketWatch) -- The collapse in the housing industry accelerated in January, as construction on new U.S. housing units plunged 16.8% to a seasonally adjusted annual rate of 466,000, the Commerce Department reported Wednesday, far below the weakest levels of construction in the post-World War II era.

Housing starts have dropped at double-digit rates for three straight months, falling at an 86% annual rate over that period.

Starts are down a record 56% in the past year and are down 79% from the peak three years ago.

The large declines in the past few months could be good news for the economy, on the principle that when you are in a hole, the first thing to do is to stop digging. Builders are trying to reduce their inventories of unsold homes as they face relentless competition from older homes thrown on the market by foreclosures or short-sales.

"Eventually the extraordinarily low level of new homebuilding should help get inventories of unsold homes under control, but for now the drop in new construction is being overwhelmed by the flood of fire-sale-priced foreclosed homes and short sales hitting the market, so foreclosure mitigation efforts will also be key to the inventory situation," wrote David Greenlaw and Ted Wieseman, economists for Morgan Stanley. .........(more)

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