Housing starts hit lowest level in 18 months

By Charles Riley, staff reporter


NEW YORK (CNNMoney.com) -- New home construction fell to an 18-month low in October, the government said Wednesday.

Housing starts, or the number of new homes being built, fell 11.7% to a seasonally adjusted annual rate of 519,000 in October, down from a revised 588,000 in September, the Commerce Department said. The annual rate is the lowest since the 477,000 starts reported for April 2009.

Economists were expecting a rate of 600,000 housing starts, according to a consensus estimate from Briefing.com.

Economists were not expecting a strong report, because the number of new building permits has been weak for months, according to Sam Bullard, senior economist at Wells Fargo.

"We were expecting a pullback," Bullard said. "The surprise was that it came down as much as it did."

Housing starts have fluctuated between high 400,000s and high 600,000s since late 2008, but that range is a sharp decline from historical averages, and a marked drop from rates that hit in excess of 2,000,000 at the peak of the housing boom.

"Right now there is little demand for any kind of new construction," Bullard said. "And you have to factor in this time of year as well. This is not prime time for the housing market."

October's rate of 519,000 is the third lowest recorded since Jan. 1959.

"We are right back in the bottom of the trough in terms of housebuilding," said Robert Dye, senior economist for The PNC Financial Services Group.

Much of the weakness stems from lower numbers in the multi-family home construction, he added.

Permits for future construction rose to a seasonally adjusted annual rate of 550,000 last month, 0.5% above the revised rate of 547,000 in September, but fell short of expectations.

While the rate did increase, economists were expecting 570,000 permits in October.

If one positive can be taken from the report, it is the slight increase in permits, Bullard said. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.