WASHINGTON - HOUSING starts in the United States tumbled last month to the lowest in more than six years, as waning home sales and swollen inventories discouraged new projects.
Builders broke ground on 1.49 million new homes at an annual rate, down 14.6 per cent from September's pace of 1.74 million homes, the Commerce Department said yesterday.
Building permits dropped to a 1.54 million pace, a record ninth straight decline and the lowest since December 1997.
The bigger-than-expected drop suggests that home construction may continue to sap economic growth into the fourth quarter. Federal Reserve Bank of St Louis president William Poole said this week that policymakers are paying 'special attention' to housing, and that he is concerned about the number of would-be purchases being cancelled.
'We still have some ways to go in terms of the adjustment to housing starts,' Mr Eric Green, chief market economist at the securities arm of Countrywide Financial Corp in Calabasas, California, said before the report. 'Inventories of unsold homes are off the charts.'
Economists polled by Bloomberg forecast that housing starts would fall to a 1.68 million unit pace from an originally reported 1.77 million rate in September, according to the median of 68 estimates, which ranged from 1.58 million to 1.78 million.
The number of housing starts last month was the weakest since July 2000. Permits were expected to fall to 1.63 million from 1.64 million. Housing starts are down 27 per cent from a year earlier.
Construction of single-family homes fell 16 per cent to a 1.18 million rate, yesterday's report showed. Work on multi-family homes, such as town houses and apartment buildings, fell 9.1 per cent to an annual rate of 309,000.
The number of homes under construction fell 2.3 per cent to a 1.29 million pace last month. Housing completions dropped 3.8 per cent to an annual rate of 1.95 million.
The number of housing units authorised, but not yet started, decreased 2.5 per cent to 200,200.
Higher mortgage costs and surging prices have put properties out of reach for many buyers.
The 30-year fixed mortgage rate has averaged 6.48 per cent during the second half of this year. The rate was 5.87 per cent for the whole of last year, according to Freddie Mac, the No. 2 purchaser of home loans.
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