Housing starts at underappreciated new low

The Commerce Department released(.pdf) the April data for new home construction and, just when you think the home building business can't get any worse, it does.
After rebounding sharply in February and then dropping 8.5 percent in March, housing starts fell 12.8 percent in April to a new record low of an annualized rate of 458,000 units.

Permits for new construction also declined, down 3.3 percent in April, after dropping 7.1 percent the month before. From year ago levels, housing starts are now down 54.2 percent and permits have fallen 50.2 percent.

From the peak in early-2006, housing starts have tumbled a mind-numbing 80 percent with housing permits only slightly better at minus 78 percent.

In April, single family housing starts actually improved modestly, however, the 2.8 percent gain was dwarfed by a plunge of 46.1 percent in starts for multi-family units.

By region, the decrease in starts was led by a plunge of 31 percent in the Northeast and declines of 21 percent in both the South and the Midwest while starts in West rose 43 percent.

As noted here in March, it is difficult to appreciate just how depressed current levels of home building are. While April's total is a new record low for a data series that goes back to 1959, that says nothing about just how bad current numbers are in population adjusted terms relative to the lows of prior decades.

Prior to 2008, the record low for housing starts had been an annualized rate of 798,000 in January of 1991, putting April's new low 43 percent below that mark.

This, in itself, is astonishing, but when adjusted for the roughly 22 percent increase in population since that time, the current level of housing starts is less than half of the previous record low, a full 53 percent below the 1991 record in a data series that goes back 50 years.

It's hard to imagine that new home construction could fall further from current levels, but, it just might do so if foreclosures continue to swamp the market this year.