Builders began work on fewer houses than forecast in December, capping the worst year on record for single-family home construction and signaling recovery in the industry will take time.
Housing starts dropped 4.1 percent to a 657,000 annual rate last month, reflecting a slump in multifamily dwellings, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, were little changed.
Four years after housing helped spark the last recession, falling home prices and ongoing foreclosures are hampering an industry-wide recovery. For all of 2011, work was started on 428,600 single-family homes as construction competed with the surfeit of previously owned dwellings.
“Things last year were absolutely awful,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “The housing market is better than it was earlier in 2011, but the single-family market is still in really bad shape. Prices are still going to drop more because there are still a lot of foreclosures in the pipeline.”
The median forecast in a Bloomberg News survey called for 680,000 starts at an annual rate. Estimates (NHSPSTOT) ranged from 625,000 to 723,000 in the Bloomberg News survey of 76 economists.
