September 17, 2008
With foreclosures adding to a glut of homes on the market, U.S.
homebuilders hunkered down in August, breaking ground on the fewest
number of new homes in nearly 18 years.
In its monthly report, the U.S. Commerce Department said new home starts plunged 6.2 percent during the month, to a seasonally adjusted 895,000. That's the lowest number since January 1991 and is down 33 percent from August 2007.
Economists see a silver lining to the sobering numbers. Ian Shepherdson, chief U.S. economist at High Frequency Economics, told Reuters that reducing the increase in inventory is the only way to bring stability to the housing market.
There's nothing to suggest builders will be busier in the next few months. New applications for building permits were down 8.9 percent in August, to an annual rate of 854,000. That's 36 percent below the August 2007 level.
Those who are shopping for a new home should find cheaper mortgages. Mortgage rates have fallen sharply since the federal takeover of mortgage giants Fannie Mae and Freddie Mac. The Mortgage Bankers Association reports mortgage applications surged last week, but mostly because existing homeowners were refinancing at lower rates.
