Single-family construction falls to 17-year low

From CNN:

Initial construction of U.S. homes rose unexpectedly in April, but the
all-important single-family housing start measure fell to another 17-year low,
according to a government report released Friday.

Privately owned housing starts rose to a seasonally adjusted annual rate of 1,032,000 in April, according to the Commerce Department. The rate was up 8.2% from March’s revised reading of 954,000 but 30.6% lower than April of 2007.

and:

Total housing starts got a boost from multi-family homes. Buildings with
five or more units rose 7.3% to a seasonally adjusted rate of 294,000, and homes
with two to four units rose 2.7% to 38,000.

and:

Construction of new single-family homes registered the lowest reading of
that measure since January 1991. Single-family housing starts were at a rate of
692,000 in April, 1.7% below March’s number. Single-family homes are considered
the core of the housing market.

Applications for building permits, however, rose to a seasonally adjusted annual rate of 978,000 last month. That’s 4.9% above the revised 932,000 rate in March. Economists were expecting permit applications to fall to 912,000.

That’s encouraging news for homebuilders, because building permits are considered a reliable sign of future construction activity. Single-family housing permits rose 4% to 646,000 in April, and multi-family homes rose 7.3% to 294,000.

With the number of homes under construction declining, and the numbers of apartments increasing, one can expect that there will be a more and more renters in the near future.

Photo: FOR RENT -- Snowbank!, originally uploaded by DavyRocket.

New home construction at 17-year low

From CNN:

Initial construction of U.S. homes fell to a 17-year low in March, a much
steeper-than-expected drop, according to a government report released Wednesday.

Privately owned housing starts fell to a seasonally adjusted 947,000
annual rate in March, according to the Commerce Department. The rate was down
11.9% from February's revised reading of 1.07 million and 36% lower than March
of 2007.

Economists were expecting housing starts to decline to 1.01
million, according to consensus estimates compiled by Briefing.com.

and

New construction of single-family homes, considered the core of the housing
market, were at a rate of 680,000, or 5.7% below last month's number.
Single-family housing starts have not been this low since May 1980.

Applications for building permits, considered a reliable sign of future
construction activity, fell to a seasonally adjusted annual rate of 927,000 in
March. That's 5.8% below the revised 984,000 rate in February. Economists were
expecting permit applications to fall to 970,000.

Because of the overwhelming glut of housing inventory, both new and existing homes, this is a necessary step in eventually finding the housing bottom. Only when the level of new construction, when combined with existing-homes offered for sale and lender-held REOs drops to a point where it is sustainable by new mortgage issuances will there be a hope of recovery.

Until that time, expect there to be a race to the bottom in prices as homebuilders, home sellers, and REO departments all scramble for the few mortgage loans out there.

Photo: Construction Love, originally uploaded by Ramperto.