Total housing permits fell to the lowest level since March 1993 (1,056,000). The month-month drop was the 23rd in the last 27 months and seventh in a row. Permits are off 34.4% from year-earlier levels, the 21st straight month of year-year declines. The year-year decline is the steepest since February 1991 in the middle of a recession.
Total housing starts in December dipped to the lowest level since May 1991 (996,000). Starts have been more erratic than permits and have fallen in seven of the last nine months. Year-year starts are down 38.2%, the 21st month in a row of year-year declines and the deepest year-year plunge since January 1991. For both permits, the month-month decline was concentrated in single family activity with permits for new single family homes falling 9.1% and starts for single homes falling 3.6%.
Single-family completions (in December) fell for the first month in the last three, dipping to the lowest level since July 1993 (985,000). The gap between completions and starts narrowed sharply from November. In November builders completed 357,000 more single-family homes than they started; in December completions outpaced starts by 230,000 signaling further construction cutbacks and efforts to stem the inventory of unsold homes. Single family completions have exceeded starts for 23 straight months but inventories of unsold homes remain stubbornly high.
Multifamily (five or more units) starts represented 19.5% of all starts, down from 29.4% in November and from 20.8% one year ago signaling builders are not responding quickly as families shift from owners to renters.
Starts fell in three of the four census regions, increasing only in the Midwest; permits rose in the Midwest and South. Falloff in housing construction is still not reflected in employment numbers: while residential starts (single- and multi-family) are down 38.2% year over year, residential construction employment is down 5.8% suggesting more layoff pain to come.
The best news from the report on permits and starts for the economy overall was the drop in completions which means builders might be trimming inventories and stabilizing prices. But the bad news is the shift in activity with builders emphasizing single-family rather than multi-family structures. That housing starts declined sharply primarily because of a plunge in multifamily starts calls into question builder efforts in trying to bring inventories of unsold new homes down even as new home sales remain very sluggish.
The net from this report is housing's contribution to economic growth will be substantially negative again in both the last quarter of 2007 and first quarter of 2008.
Source: AllHeadlineNews.com