Construction Starts Slow and Builder Sentiment Low

Construction starts fell 24.8 percent in 2007 compared to 2006, the second biggest annual decline on record, exceeded only by a 26 percent decline in 1980, when interest rates were at record highs, the U.S. Commerce Department reports. In 2007, construction was started on 1.353 million new homes and apartments. This year doesn’t look like it is going to be any better.

December’s housing starts totaled 1.006 million units at an annualized rate. Applications for building permits fell by 8.1 percent to an annual rate of 1.068 million units. That marked the seventh consecutive monthly decline and reflected the fact that builders have been slashing production plans in an effort to deal with a glut of unsold homes.

Meanwhile, a survey of builder sentiment prepared by the National Association of Home Builders came in at the second-lowest level on record in January at a reading of 19. That was up slightly from the record low of 18 set in December.

Index readings higher than 50 indicate positive sentiment. The seasonally adjusted index has been below 50 since May 2006. Last January it was at 35.

Sources: www.census.gov and www.nahb.org

Are you an employee of a new home builder or maybe a real estate agent? What have you seen or experience in the field? Comment below.

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