Credit, Economy and Financial News from TruckingFactor.com
Housing Starts Plunge in December
Housing starts fell to an all time low in December, capping a terrible year for homebuilders. The Commerce Department said construction of new homes and apartments declined 15.5% to an annual rate of 550,000 units last month,which shattered the previous low set in November. For 2008, builders broke ground on a little more than 904,000 housing units, a huge 33.3% drop from the 1.355 million housing units started in 2007. To make matters worse, applications for building permits, considered a barometer of future activity, dropped 10.7% in December. The Federal Reserve has taken a number of steps to provide some relief. It is buying certain types of mortgages and has slashed the federal funds rate to a record low of between zero and 0.25%. Also, the Obama Administration is considering steps aimed at preventing foreclosures, which have made it nearly impossible for homebuilders to compete. Yet, builders remain skeptical of a turnaround any time soon, as rising unemployment and a recession make it unlikely that many new home buyers will emerge.
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Date Last Updated: 01/28/2009