Housing starts sink to historic low

The housing market continued its downward spiral in December, with new-home construction plummeting to a record low, according to data released today by the Department of Commerce. In 2008, 904,300 housing units were started, down 33.3% from 2007, the lowest level since at least 1959, when the department first started tracking the data. It was also the largest year-over-year decline since 1974. Housing starts declined to a seasonally adjusted rate annual of 550,000 units in December, down 15.5% from a revised November number and down 45% from a year ago. The figure fell short of economists’ estimates of 610,000 units. New construction of single-family homes fell to a rate of 398,000 units, down 13.5% from November and down 49% from the comparable month a year earlier. Building permits for new homes, which serve as a barometer for future construction, also hit record lows. The number of building permits issued in December declined to a seasonally adjusted annual rate of 549,000 permits, down 10.7% from November and down 50.6% from a year ago. Permits for new single-family homes fell to a rate of 363,000, down 12.3% from November and down 49% from December of 2007. Building permits totaled 892,500, down 36.2% from a year earlier. In other news, the Mortgage Bankers Association in Washington said mortgage application volume fell 9.8% on a seasonally adjusted basis for the one-week period ended Jan. 16, from the previous week. The decline came as the average rate on a 30-year fixed-rate mortgage rose to 5.24%, from 4.89% a week earlier.