U.S Housing Starts Plunge

As reported by CNNMoney.com, "Home construction at lowest point in 6 months":

Homebuilders began construction at an annual rate of 529,000 new homes during the month, 10.6% below the revised September rate of 592,000 and 30.7% below the 763,000 rate during October 2008. It was the lowest level of housing starts since April, when the annual rate was 479,000.

Building permits showed weakness as well:

That weakness included the number of building permits issued in October, which fell to seasonally adjusted annual rate of 552,000. That was 4% below the revised September rate of 575,000 and 24.3% below the October 2008 estimate of 729,000.

Click here to view the full "New Residential Construction in October 2009" report as released by the U.S. Census Bureau and U.S. Department of Housing and Urban Development.

Housing Starts and Building Permits Drop to Record Low

As reported on CNNMoney.com - "Housing starts, permits at record lows":

Housing starts and permits, both of them key measurements of home construction, hit record lows in October, the Commerce Department reported Wednesday.

Housing starts reached an annual rate of 791,000 last month, the lowest level since the department began tracking starts in 1959. The rate tumbled 4.5% from the revised reading of 828,000 in September.

Building permits fell 12% to an annual rate of 708,000 in October, breaking the previous low of 709,000 in March 1975. The annual rate for September was revised to 805,000.

What was expected?

Building permits were expected to fall to an annual rate of 772,000 in October, according to a consensus of economist opinions from Briefing.com. An annual rate of 780,000 housing starts was expected for October.

Any of this beginning to sound like a broken record? As we suggested in last months housing starts and building permits report (Housing Starts / Building Permits Drop to Levels Not Seen Since January, 1991), the numbers remain atrocious but the bright spot remains that this trend will ultimately lead to shrinking inventory levels. Simple supply and demand. Lower inventory levels equal a happier housing market for everyone except buyers looking for a blockbuster deal. Until then, construction related jobs will remain under pressure.

Bloomberg - Reaction to Housing Starts / Building Permits Report

Housing Starts / Building Permits Drop to Levels Not Seen Since January, 1991

The news:

"Initial construction of U.S. homes fell to a fresh 17-year low in September, according to a government report released Friday.

Privately owned housing starts fell to a seasonally adjusted annual rate of 817,000 in September, according to the Commerce Department. The rate was down 6.3% from August's revised reading of 872,000 and 31.1% lower than September 2007." - (CNNMoney.com)

It's ugly and getting uglier:

Housing starts have fallen nearly two-thirds from their peak of 2.3 million in January 2006, and were at the lowest annual pace since January 1991.

'This is bad news for anyone who works in the housing industry, bad news for the economy as a whole, and the decline in housing activity just continues to deepen,' said Mike Larson, an analyst for Weiss Research. 'This is one of the worst downturns in the housing market in the history of our country.'

A bright spot:
Lower inventory levels will ultimately turn this housing market around (simple supply and demand economics). There is demand, there's no credit, and there's too many homes.