Another dismal housing report raises questions about whether the bottom has been reached in construction, even as mortgage rates retreat.

August housing starts plunged 6.2% to 895,000 units, the lowest level since January 1991, and permits fell 8.9% to 854,000, their lowest since February 1991. Single-family starts fell 1.9% and single-family permits fell 5.1%, confirming the poor outlook. 

Starts were lower in all areas except the West — up 10.8% overall, singles rose 3.5% — where a strong seasonal adjustment boosted the total. Unadjusted single-family starts in the West were off 6.9%.

Permits were also very weak. The only gains were registered in singles in the Northeast — up 7.1%, perhaps again reflecting alterations in the New York City building code — and in multi-units in the Midwest.

This is another disappointing housing report, and record low single-family permits in the Midwest and West suggest that there is no recovery looming for new construction.

Looking ahead, better housing affordability and lower interest rates should help construction. But the summer data show housing remains in the doldrums, perhaps reflecting ongoing credit restriction.

On the year, August housing permits are 36.4% lower, starts are 33.1% lower, and housing completions are 35.8% lower, illustrating the depth of the problem.

— Market News International

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