U.S. Housing Starts Plumb Another Record Low

It now is more than clear that the pace of the downturn in the U.S. housing market has accelerated. The latest Commerce Department figures indicate that in January starts fell to 466,000 (AR), another record low in the series' history that extends back to 1959. December starts were revised slightly lower and the January level was well below Consensus expectations for 530,000 starts.

As with the release of the December figures, the January numbers indicate that the rate of decline in starts definitely has accelerated. At an annual rate, starts in January were eighty-six percent below the level of three months earlier. That surpassed the rate of decline during the "credit crunch" recession of 1980 and it's nearly one-third faster than the quickest in 2008.

Starts of single-family homes fell to another record low of 347,000 from a downwardly revised December level. The latest level is down eighty-one percent since the peak in early 2006, about equal to the annual rate of decline during the last three months. Permits to build single-family homes also fell to another record low, off by nearly one-third during the last three months. 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.

Starts of multi-family homes fell 27.9% in January and the latest level matched their record low in early-1993. They are down by nearly one-half during the last three months.

By region, in January starts of single-family units in the Northeast fell by more than half from the December level and were off by three-quarters from one year ago. Starts in the Midwest fell 20.3% from December and they were also down by more than one-half from January of 2008. In the South starts fell by a lesser 5.4% during January but they too were off by more than one-half from their January 2008 level. In the West starts eked out a 2.5% rise last month but they were off by more than one-third from the year ago level.

The housing starts figures can be found in Haver's USECON database.

Facts and Myths about the Financial Crisis of 2008 from Federal Reserve Bank of Minneapolis is available here.

Looking Behind the Aggregates: A Reply to “Facts and Myths about the Financial Crisis of 2008” from the Federal Reserve Bank of Boston can be found here.