Housing starts plunge 16 percent in December 2008

2009 January 23

January 23 2009 - US builders broke ground on a record-low number of houses in December, signaling the real estate slump will keep hurting economic growth.

Housing starts fell 16 percent from November to an annual rate of 550,000, the lowest since the government started compiling statistics in 1959, the Commerce Department said yesterday. Building permits, an indicator of future projects, fell 11 percent to another record low.

Builders, which have lost three-quarters of their stock market value over the last three years, are slashing prices to compete with a record number of foreclosed homes coming onto the market as sales and credit dry up. President Obama’s advisers say he will use up to $100 billion in financial rescue funds to ease the mortgage crisis.

“Homebuilders have no choice,” said Ryan Sweet, who is an economist at the firm Moody’s Economy.com Inc. in West Chester, Pa. “The market is bloated with excess supply, and demand is weak. The pace of housing starts will remain depressed until 2011.” Economy.com projected starts would drop to a 580,000 pace.

Housing starts plunge 16% in December

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