The U.S. Census Bureau and the HUD Department announced the new homes construction stats for December 2008 today. Total building permits were at a seasonally adjusted annual rate of 549,000 which was 10.7% below November 2008 and was down 50.6% from a year ago. 1 unit permits were at a seasonally adjusted annual rate of 363,000 which was down 12.3% from the previous month and down 49.2% from a year ago. This is the lowest rate on record going back to 1960. If adjusted for population growth, today's figures would be much lower. Total housing starts were at a seasonally adjusted annual rate of 550,000 which was down 15.5% from the previous month, and down 45.0% below December 2007. Economists had forecast starts to be at a 605,000 annual pace. 1 unit starts were at 398,000 which is down 13.5.0% from November 2008 and down 48.9% from a year ago. Housing completions were at a seasonally adjusted annual rate of 1,015,000 (1 units were at 668,000) which was 5.2% above the previous month, and 23.6% below December 2007.
There is an oversupply of housing so these large drops in construction are actually a good thing. Even though construction of new homes has dropped quickly, sales have dropped just as fast. Soon months supply will start to inch down, but we are still far away from supply and demand being balanced. New homes are also adversely affected by the large surplus of existing homes.
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