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Economy in Brief

U.S. Housing Starts Plumb 1991 Lows
by Tom Moeller January 17, 2008

Not since the recession of the early 1990s have housing starts fallen so low. A 14.2% m/m decline in December dropped starts to 1.006 million units after a downwardly revised 7.9% November decline. The decline, which by far exceeded Consensus expectations for 1.145M starts, was to the lowest level since 1991.

For all of 2007 housing starts fell 25.8% after a 12.6% decline during 2006.

The relatively mild 2.9% m/m drop to .794M single family starts in December was hardly indicative of a less dramatic decline this cycle. It too dropped starts to the lowest level since early 1991. The decline followed drops in each month since March. Since the peak in early 2006, starts of single family homes are down 56.8%.

Multi-family starts plunged 40.3% last month after a 10.1% November decline. That left starts at their lowest level since 1994.

By region, single family starts in the Northeast continued down and fell 7.4% (-29.9% y/y) after a 16.5% November decline. Starts in the Northeast are 56.9% below the early 2006 peak. Single family starts in the Midwest fell 9.3% m/m (-29.4% y/y). These starts are down 65.3% from the early 2005 peak. Single family starts in the West nearly doubled the November rate of decline and fell 16.3% (-54.1% y/y). They are 71.0% below the 2005 high. And in the South, single family starts actually posted the second consecutive monthly gain (-30.0% y/y) but still closed the year 51.3% below peak.

Building permits fell 8.1% (-34.4% y/y) and were down 51.8% from the 2005 peak. Single-family permits posted a 10.1% m/m decline (-41.4% y/y), down 61.5% from the peak.

Today's Congressional testimony by Fed Chairman Ben S. Bernanke, The Economic Outlook, can be found here.

Measuring Consensus as the Midpoint of Central Tendency from the Federal Reserve Bank of St. Louis can be found here.

Housing Starts (000s, AR) December November Y/Y 2007 2006 2005
Total 1,006 1,173 -38.2% 1,344 1,812 2,073
  Single-Family 794 818 -35.7% 1,040 1,474 1,719
  Multi-Family 212 355 -45.4% 304 338 354
Building Permits 1,068 1,162 -34.4% 1,370 1,842 2,159
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