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Danny Johnston / AP
Work progresses at a new home construction site in Little Rock, Ark. Builders ended 2011 with a third straight year of dismal home building and the worst on record for single-family homes.
By msnbc.com news services
U.S. housing starts fell in December as groundbreaking on rental properties posted a big decline, splashing some cold water on hopes the still-weak housing sector could boost economic growth this year.
The Commerce Department said Thursday housing starts fell 4.1 percent last month to a seasonally adjusted annual rate of 657,000 units. Economists polled by Reuters had forecast housing starts edging down to a 680,000-unit rate in December.
A decline in housing starts last month contributed to the depressed number of homes started last year and offered a stark reminder that a housing recovery is a long way off.
2011 with a third straight year of dismal home building and the worst on record for single-family home construction.
Builders started just 606,900 homes last year. That is only slightly better than the previous two years, and it is roughly half the 1.2 million that economists equate with healthy housing markets.
Last year was also the worst for single-family home construction on records dating back a half-century. Builders started just 428,600. In a good economy, builders break ground on about 840,000.
Single-family homes are critical to a housing rebound because they account for roughly 70 percent of the market.
Most analysts say it will be years before the industry is fully recovered. Even a steady rise in apartment construction last year offered only a sliver of hope that 2012 will be a little better.
Renting is gaining popularity because of the weak housing market. Some are renting because they have no other option; they can neither afford nor qualify to buy a home. But others are choosing to rent because they have less confidence that homes will appreciate or even retain their value.
Sales of new homes last year are likely to be the worst on records dating back half a century. Record-low mortgage rates and plunging home prices have done little to lift the market.
Builders are struggling to compete with deeply discounted foreclosures and short sales — when lenders allow homes to be sold for less than what's owed on the mortgage.
Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a re-sale. That's nearly twice the markup typical in a healthy housing market.
The homebuilders' trade group said Wednesday that its survey of industry sentiment rose in January to 25, the highest level since June 2007. Still, any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.
The Associated Press and Reuters contributed to this report.
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All you business/finance "reporters" must have serious memory rentention problems. Or, you're just putting up whatever our far less than trustworty government spits out. Yesterday you reported that housing contractors were the most optimistic in three or four years. Today, housing starts are at a new low. Are the house builders thrilled that no one is hiring them to build a house or two?
You numbskulls need to pay attention to what your putting out here day to day. Your explaination of why the stock market is moving (either way) is particularly comical in a pathetic way.
Oh come now, don't be so rough on the poor media, befuddled; I mean what harm is a little made up bulls**t about housing if it helps the Great Inept One's reelection effort?
Like the stock market there's no basis in reality for any of this.
The other shoe has yet to drop. IMHO.
This presupposes that more taxes are a good thing. And we don't need more houses, get it?
They missed a big reason why people are choosing to rent rather than own - job insecurity and mobility. Long term employment is less secure than ever.....who wants a mortgage anchoring you down in case you need to hop to another part of the country or world to retain employment. Suspect there is no proposals in the works to address this issue….so gloss over and ignore.
Everyone throw the towel in? Maybe starting to be a good time to buy! Eventually you run out of houses as population grows. It takes a decade but it will happen. We are 4-6 years into this. Couple more to go! hang in there. I think the baby boomers have to take their haircut now - go for the condo's! that's where these slimy greedy old folks will go and you can make a buck. Once we dump this loser in chief, people may start to feel better about things.
Amen - somebefuddledperson
thank you obamie.
Wow that's really breaking news! I been in the concrete business for 27 years pouring slabs and basements for new houses and guess what? December is always slow as the weather in the northern parts of the Country is too cold to pour concrete. This report is just stupid!
The numbers are adjusted to account for the seasonal variation, so down is down.... for the moment. They will eventually restate December's #s after a few more months of info.
The banks (who have been repaid for their losses by the taxpayer) aren't through taking back all their property yet. Once they can get the housing prices low enough to completely destroy our equity, then they'll start lending money - of course not until interest rates get back to 15%.
I dislike banks too, but they have repaid the TARP money. The continuing ripoff remains the money they borrow from us at 0%. Why can't I borrow money at 0%? I'm a far better risk than a bank.
Maybe you would like to loan money out at 0% interest, or close to it? If so, you can loan for people to buy houses ... while politicians talk about not allowing you to foreclose if they stop paying you. And if they don't like the way you did the paperwork, YOU have to pay the non-payers more money, beyond what you loaned them and they aren't paying back.
Hmmm, I think I'd rather not loan MY money under those conditions ...
Well, I am loaning money out at 0% via the Fed and no, I don't like it either. Survive!
It's up. It's down. It's down. it's up. I'm feeling rather sick from the seesaw ride we are on. Could someone please make up their minds is it up or is it down, It cannot possibly be both.
They manufacture "news" out of nothing.... well, not much, anyway. I'm guessing The Natl Assn of Home Bldrs has an ax to grind.
This is really the time to buy a home even if property values continue to fall some. They can't fall much more than they already have. You can buy a later model home for half to two thirds of what it would take to build one. Plus, look at how the dollar has lost value while home prices continue to fall. That gives you even a better deal when you buy with deflated dollars. For those who happen to be shopping for a home and have a job to pay the loan and/or other expenses, you will find yourself in a really nice home for the money!
Not to worry. Housing will be back to almost 2006 pricing levels by 2026. Unless the government continues to meddle in which case it will take somewhat longer.
In a good economy, or in a year like 2005 when people were irrationally buying anything that a builder built?
I suspect the latter.
thanks barry. nancy, barney, and chris...........what a mess.
"barry" was responsible for the housing bubble collapse that happened before he was elected?
If you truly want to "thank" a lot of people, thank realtors, builders, homeowners, appraisers, and lots of people in the gov't, including george bush who added his own incentives for new home buyers.
"Both the Clinton and Bush administrations aggressively pursued the goal of expanding homeownership, so credit standards eroded. Lenders and the investment banks that securitized mortgages used rising home prices to justify loans to buyers with limited assets and income. Rating agencies accepted the hypothesis of ever rising home values, gave large portions of each security issue an investment-grade rating, and investors gobbled them up....
Monetary policy, mortgage finance, relaxed lending standards, and tax-free capital gains provided astonishing economic stimulus: Mortgage loan originations increased an average of 56% per year for three years -- from $1.05 trillion in 2000 to $3.95 trillion in 2003!"
I know simple people like simple explanations of complex problems, but reality is otherwise.
Vermont, I agree with most of your post, but the housing bubble continues to pop. Obama has not helped matters. That said, I don't think it's within his responsibility or ability to help. The govt should not try to "fix" the economy and it shouldn't try.... at least not directly.
However, I can think of two marginally-related Constitutional and possible actions that would help matters. One, radically simplify taxes. Two, end the drug war.
Houses were way overpriced. Why does the media and most Americans keep expecting them to go back to "unaffordable" anytime soon? It took about 10 years for the 1989 bubble to turn around. Expect the same timeline for this one.
Yes, and isn't cheaper housing a good thing for some of us? I really resent my tax money being used to prop up home prices. They're still way too expensive in most places.
Now the fog is starting to lift there Darn, the excuse that the elite gave for the faux "crash" is all these evil people that bought more than they could afford. The problem with that excuse (well other than it's a cover for the greatest theft offense in human history) is that ANY house was more than most people could afford. The housing prices were propped up by the banks, the RealtWhores, and the crooked appraisers. They wanted this crash to happen so the the middle classes wealth could be siphoned upward to the wealthy. With more people depending on unemployment, government handouts, food stamps, and welfare, the wealthy can work their employees like slaves. It was all part of the plan my friend. Some are starting to wake up but it's too little too late. We're doomed.
Up one day down the next, we no longer have objective reporters, we have government owned stenographers.
Few homes built is what we need to work off the supply already on the market.