WASHINGTON – July saw the fewest new home starts in 17 years, according to the monthly housing starts report released today by the Commerce Department, reinforcing the fear that the economy will remain weak into 2009.
“There’s still a lot of excess inventory,” Michelle Meyer, an economist at Lehman Bros. Holdings Inc. in New York, told Bloomberg News. “Foreclosures are competing with builders, and that will keep builders on the sidelines for a while.”
The annual rate of housing starts fell to 965,000 in July, a decline of 11.0 percent compared with June’s revised rate of 1.08 million, was the lowest since March 1991. In addition, work began on 30 percent fewer homes than in July 2007. A Bloomberg News survey of 77 economists had projected the annual rate to fall to 960,000 from a previously estimated rate of 1.07 million in June (estimates had ranged from 875,000 to 1.09 million).
Building permits, a sign of future construction, slowed in July by 18 percent to an annual pace of 937,000, less than the 970,000 median rate projected by economists.
The Northeast led the nation in the drop in starts, recorded a decline of 30 percent in July when compared with June. The South and West both experienced drops of 8.2 percent, while the Midwest showed a gain of 10 percent. The Northeast’s large decline was attributed in part to the jump in starts in June (READ MORE) by builders anxious to start work before new regulations went into place in New York City’s building code on July 1.
Additional information, including the full New Residential Construction Report from the U.S. Commerce Department’s Census Bureau and the U.S. Department of Housing and Urban Development, is available at www.census.gov.
