US housing starts hit 10-year low

WASHINGTON - HOME builders in the United States started work on the fewest number of new houses since August 1997 as a glut of unsold homes discouraged new projects.

Housing starts slumped 14.3 per cent to an annual pace of 1.408 million, less than forecast and down from December's 1.643 million rate, the US Commerce Department said yesterday. Building permits declined 2.8 per cent to a 1.568 million pace.

The figures show that even as sales rebounded, residential construction will remain a drag on the economy until the inventory of unsold homes declines.

Federal Reserve chairman Ben Bernanke told lawmakers this week that the process may extend through much of the year.

'Housing inventories are still beyond bloated, and starts aren't going to recover in any meaningful way until those inventories come down,' said chief economist Chris Low at FTN Financial. 'I would be cautious about calling an end to the housing slump just yet.'

Forecasts of starts ranged from 1.5 million to 1.72 million. Permits were expected to drop to 1.59 million, according to the median estimate.

Construction of single-family homes dropped 11.2 per cent last month to a 1.108 million rate, also the weakest since August 1997, yesterday's report showed. Work on multi-family homes, such as townhouses and apartment buildings, declined 24.1 per cent to an annual rate of 300,000.

Construction in the West fell 28.5 per cent to an annual rate of 301,000 last month, the slowest since December 1996. The decline in the West from December was the biggest since January 1979.

Starts also dropped 15.2 per cent in the Mid-west to a 195,000 pace, the weakest since January 1991, and decreased 11.8 per cent in the South to 716,000. Beginning construction in the North-east rose 8.9 per cent.

The number of homes under construction fell 2.4 per cent in January to a 1.218 million pace, yesterday's report showed. Housing completions declined 1.2 per cent to an annual rate of 1.88 million.

The number of housing units authorised, but not yet started, increased 2.9 per cent to 194,400.

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