New home construction at 17-year low
Government says housing starts fell 11.9% in March, with permits also weaker than expected.
NEW YORK (CNNMoney.com) -- Initial construction of U.S. homes fell to a 17-year low in March, a much steeper-than-expected drop, according to a government report released Wednesday.
Privately owned housing starts fell to a seasonally adjusted 947,000 annual rate in March, according to the Commerce Department. The rate was down 11.9% from February's revised reading of 1.07 million and 36% lower than March of 2007.
Economists were expecting housing starts to decline to 1.01 million, according to consensus estimates compiled by Briefing.com.
"These figures confirm that the housing market is still groping for a bottom," said Mike Larson, a real estate analyst for research firm Weiss Research.
The housing market, faced with record high inventories and weak demand from home buyers, has been in turmoil since a bubble burst last summer.
But the ongoing decline in new home construction is a necessary step toward reestablishing balance in the market, Larson said.
"As painful as these numbers are in the short term they are exactly what we need for long-term growth," he said.
New construction of single-family homes, considered the core of the housing market, were at a rate of 680,000, or 5.7% below last month's number. Single-family housing starts have not been this low since May 1980.
Applications for building permits, considered a reliable sign of future construction activity, fell to a seasonally adjusted annual rate of 927,000 in March. That's 5.8% below the revised 984,000 rate in February. Economists were expecting permit applications to fall to 970,000.
Construction of new multi-family housing declined to a rate of 680,000 from 721,000 last month.