March 3, 2009

Housing Starts Plummet

Construction of new homes fell nearly 17% last month to an all-time low, signaling no clear end to the housing market troubles.

Starts fell to a seasonally adjusted annual rate of 466,000 in January, according to the Commerce Department. That's the lowest level since the government started keeping records in 1959.

January marked the fourth consecutive month in which housing starts fell to a new record low. Starts have fallen nearly 80% from their peak of 2.3 million in January 2006.

The sharp decline in building activity suggests that home building will continue to drag on the economy for a while. Many economists have identified the battered housing market as the root of the problem behind the recent credit crisis.

But the drop in building could actually help the struggling market rebound. Homebuilders continued to construct new homes well after the housing bubble burst, leading to an enormous glut of unsold homes on the market. Rising foreclosures have added to the number of unoccupied homes for sale.

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