Builders began work on fewer houses than forecast in December, capping the worst year on record for single-family home construction and signaling recovery in the industry will take time.
Housing starts dropped 4.1 percent to a 657,000 annual rate last month, reflecting a slump in multifamily dwellings, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, were little changed.
Four years after housing helped spark the last recession, falling home prices and ongoing foreclosures are hampering an industry-wide recovery. For all of 2011, work was started on 428,600 single-family homes as construction competed with the surfeit of previously owned dwellings.
“There’s little reason for builders to ramp up residential construction in any strong way until we work off more of the existing supply of homes,” said Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who projected a rate of 660,000 starts for December. “There’s still issues with foreclosures. We suspect prices are going to go down another 5 to 6 percent, but we do expect them to bottom this year and gradually pick up from there.”
Read more...U.S. Housing Starts Drop 4.1%, Worse Than Forecast - Bloomberg