As housing supply is further restricted, yet population grows, demand becomes ‘pent-up’. History would predict we are being set up for a rise in future housing prices. Since the drop in supply is dramatic, the rise in prices should be just as dramatic. The only true question - WHEN?
NEW YORK (CNNMoney.com) — Initial construction of U.S. homes fell to the lowest level on record in January, according to a government report released Wednesday.
Starts of privately-owned houses 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.
The rate was down 16.8% from December’s revised reading of 547,000 and 56.2% lower than January of 2008. Economists were expecting housing starts to decline to 529,000, according to consensus estimates compiled by Briefing.com.
Housing starts have fallen nearly 80% from their peak of 2.3 million in January 2006.
New construction of single-family homes reached an all-time low rate of 347,000, or 12.2% below December’s level. Experts consider single-family homes to be the core of the housing market.
Housing starts were dragged down further by a 25% month-over-month drop in multi-family home starts during the last month. Construction of new multi-family housing fell to a rate of 114,000, down from 152,000 in December.
Applications for building permits, considered a reliable sign of future construction activity, fell by a seasonally adjusted annual rate of 521,000 last month - also an all-time low.
That’s 4.8% below the revised 560,000 rate in December and 50.5% lower than year-ago levels. Economists were expecting permit applications to fall to 527,000.
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