Wednesday, January 19, 2011

December housing starts fall as 2nd worst year for building ends

As the market continues to struggle, single family new homes seem to be the hardest hit sector. This article explains how 2010 and 2009 were the worse years for new housing since 1959! The good news is that building permits are on the rise, and future is looking brighter in many other sectors.

By Mark Crutsinger

WASHINGTON — Builders started work on fewer homes and apartments last month than November, building at the slowest pace since October 2009.
For the year, builders broke ground on 587,600 homes in 2010, just barely better than the 554,000 started in 2009 — the two worst years on records dating back to 1959.

And the pace is getting worse. The Commerce Department reported Wednesday that builders started work on 529,000 new homes and apartments last month, at a seasonally adjusted annual rate. That's a drop of 4.3% from November.

In a healthy economy, builders start about 1 million units a year. They built twice as many in 2005, at the height of the housing boom. Since then the market has been in decline.

One positive sign is that builders appear to be planning more projects in 2011. Building permits, considered a good barometer of future activity, rose 16.7% in December to a seasonally adjusted annual rate of 635,000, best pace since March. But builders likely influenced that spike by filing more permits in California, New York and Pennsylvania ahead of building code changes in 2011.

People are buying fewer single-family homes, which represent nearly 80% of the market. Demand fell 9% from November to December, to an annual rate of 417,000 units. Apartment building increased 17.9%, to an annual rate of 112,000 units.

The collapse of the housing market helped push the country into a deep recession, and more than a year after the recession, housing is still struggling.

Unemployment remains high. Record numbers of foreclosures have forced home prices down and tight credit has made mortgages tough to come by.

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