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Economy in Brief

U.S. Housing Starts At Record Low in October
by Tom Moeller November 19, 2008

Housing starts fell to a record low last month. At 791,000 units (SAAR), the level was the lowest in the series' history which dates back to 1959. The 4.5% decline followed a revised 3.0% September drop that was slightly shallower than reported initially. Consensus expectations had been for 780,000 starts.

Starts of single-family homes fell another 3.3% to 531,000 units, their lowest level since late-1981. Since their peak in early 2006, single-family starts are down by roughly two-thirds. Permits to build single family homes also fell 14.5% (-43.3% y/y) to 460,000, their lowest since the 1981-82 recession.

Starts began 4Q down 11.9% from the 3Q average. During the last ten years there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.

October multi-family starts fell 6.8% from September and they are down by one-third from last year.

By region, October starts of single-family units in the Northeast were unchanged m/m but down 40.6% y/y. In the Midwest starts rose 11.5% but they remained 42.9% lower than last October. In the South single-family starts fell a hard 10.5% (-40.6% y/y) to their lowest since 1990 while in the West starts ticked up 1.7% (-35.1% y/y) after a 13.9% September decline.

Today's speech Monetary Policy and Asset Prices Revisited by Fed Vice-Chairman Donald L. Kohn can be found here.

Housing Starts (000s, SAAR) October September August Y/Y 2007 2006 2005
Total 791 828 854 -38.0% 1,341 1,812 2,073
Single-Family 531 549 615 -39.9 1,034 1,474 1,719
Multi-Family 260 279 239 -33.5 307 338 354
Building Permits 708 805 857 -40.1 1,389 1,844 2,160
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