Housing Starts Tumble 13.3% to 8-Year Low

Housing starts fell 13.3% last year to a level not seen since the last recession, the government said Thursday. Analysts said any substantive improvement was months away.

“It’s a down market and it’s going to be a down market through at least the first quarter,” said economist Martin Regalia of the National Council of Savings Institutions. “And when it comes back, it’s going to be a modest comeback.”

The Commerce Department said the year ended with a 12.4% decline in starts in December, to just 987,000 units at a seasonally adjusted annual rate. That was the smallest number of monthly starts since a 902,000 rate in June, 1982.

It helped drive starts for the year down to 1.19 million units, compared to 1.38 million in 1989. It was the lowest level of yearly starts since builders broke ground on 1.06 million units in 1982.

Thomas Holloway, an economist with the Mortgage Bankers Assn., said the contraction probably bottomed out in December but added that “I don’t think we can expect a surge in activity” during the first part of the new year.

Applications for building permits, often a barometer of future activity, appeared to support forecasts of lingering weakness. They fell 6.6% in December to an annual rate of 846,000, the smallest amount since 808,000 forms were filed in February, 1982.

Starts fell steadily throughout the year, except for November when they jumped 9.8% solely because of a 92% gain in apartment buildings. Analysts said the November number was an anomaly and couldn’t be sustained.

Indeed, apartment construction fell 35.4% in December, to an annual rate of 232,000 units.