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Housing Starts Fall Sharply

By Howard Schneider
Washington Post Staff Writer
Friday, October 17, 2008 9:49 AM

Housing starts and permits for new home construction fell sharply again in September, with requests for new building permits falling to levels not seen since the recession of the early 1980s.

The slump in the housing and real estate industries is a central component of the global financial crisis, with falling home values and rising default rates leaving banks worldwide saddled with bad or questionable loans. It has also helped contribute to a broader decline in economic activity.

New monthly data released by the federal government today indicate that the housing downturn continues to deepen.

Housing starts fell to a seasonally adjusted annual rate of 817,000, a 6.3 percent decline from the month before and more than 31 percent below September of a year before.

It is the lowest monthly rate for home starts since January 1991.

Permit requests registered an even more dismal outcome, dropping to a seasonally adjusted annual rate of 786,000, an 8.3 percent decline over August and more than 38 percent below the same month a year ago. Building permits are considered a barometer of future activity, and on that front the outlook is grim: The last time a lower figure was recorded was November 1981.

With prices continuing to drop and a large inventory of unsold homes remaining, analysts have looked hard for signs that the slump in the real estate industry is reaching a bottom -- a precursor, many feel, to reviving the economy.

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