Housing Starts Fall to ’82 Level

The housing industry showed new signs of crumbling under the weight of high mortgage rates and tight credit in May as construction of new homes and apartments dropped for a fourth straight month to recession-era levels.

The Commerce Department said Tuesday that building starts fell 1.4% in May--after bigger declines the previous three months.

The seasonally adjusted total shrank to 1.207 million units. It was the lowest since October, 1982, near the end of the last business recession, when starts fell to 1.173 million units.

Construction of single-family homes fell 1% in May, while apartment building was down 2.5%.

Dave Seiders, chief economist for the National Assn. of Home Builders, said wet weather held up some building in May. But a credit crunch for builders and high lending rates for potential buyers were more important factors. “Prospects for any kind of a turnaround are not very good,” Seiders said.

Starts for 1989 fell to 1.37 million units from 1.49 million in 1988--the lowest level since 1.06 million starts in the recession year of 1982. Seiders sees the 1990 total falling to 1.28 million. Building permits, an indicator of plans, fell 4.6% in May to a seasonally adjusted annual rate of 1.057 million.

HOUSING STARTS

Seasonaly adjusted annual rate, millions of units. May, ‘90: 1.21 April, ‘90: 1.22 May, ‘89: 1.31

Source: Commerce Department