WASHINGTON, Jan 17: The US homebuilding sector in 2007 collapsed in the sharpest decline in 27 years amid a persistent real-estate slump and tightened credit that has stoked fears of recession, government data showed on Thursday.
Capping a grim year in the housing sector, housing starts fell by 14.2 per cent in December to an annualised pace of 1.006 million privately owned properties, the Commerce Department said.
It was the weakest level since May 1991, and far below analysts’ forecast of 1.150 million units. A whopping 41.1 per cent decline in starts for five or more unit buildings was the key factor in the collapse.
Construction permits, a gauge of future activity, fell by 8.1 per cent in December to 1.068 million, their lowest level since March 1993. That fell short of the forecasted 1.140 million units, a further sign that housing woes would continue in coming months.
Building permits for single-family dwellings were down 10.1 per cent from November.
“This dismal housing report ... is proof that we might as well get comfy because it’ll take some time before we see the bottom in housing,” said BMO Capital Markets analyst Jennifer Lee.
The overall decline for 2007 was the sharpest since 1980, according to the survey.
Total housing starts dropped by 24.8 per cent to 1.354 million units and building permits fell by 25.2 per cent to 1.376 million.
The report revealed deepening signs of trouble in the battered real estate market, hit by a crisis in subprime mortgages -- home loans given to people with poor credit -- and the collapse of a speculative housing bubble in 2006.
Home prices have plummeted and foreclosures have spiked in the turmoil, while the glut of property for sale has further weighed on prices.
“For inventories to come down, home prices and housing starts must continue to fall,” said Patrick Newport, an economist at Global Insight.
The housing meltdown is considered a major drag on US economic growth, with some analysts saying the world’s biggest economy is at an imminent risk of a recession.—AFP