US HOUSING starts approached their lowest level in nearly half a century in September and look set to fall further in a sign of the deepening crisis in residential real estate, commerce department figures showed yesterday.
In other data, confidence among consumers fell by the most since records began in 1978 in October, according to the Reuters/ University of Michigan index.
The fresh lows in the housing market and heightened fears among consumers underline how the increased intensity of credit market turmoil that began after the failure of Lehman Brothers last month has fed through to the real economy. "The economic outlook has been messed up by the negative impact of the banking crisis," said Torsten Slok, a Deutsche Bank economist.
Construction of new homes started at a seasonally adjusted annual rate of 817,000 last month, 6.3 per cent less than the August level of 872,000 and 31.1 per cent below last year - the weakest level of new building since January 1991, when starts hit 798,000. Excluding that month, starts have never been lower since records began in 1959.
Building permits, which signal future housing activity, fell even more - 8.3 per cent - suggesting starts will breach their historic low later this year. "If you thought it could not go much lower, think again," said Alan Ruskin of RBS Global Banking and Markets.
Declining construction activity will have helped depress economic growth in the third quarter amid a growing swathe of indicators to suggest the US may be heading for a particularly nasty recession.
"A person starting to build a house now would have to be extraordinarily brave," said Mike Englund of Action Economics.
There are glimmers of hope: starts of single-family homes fell by the least in three months, while a 17.7 per cent drop in the west should counteract oversupply there, although the south saw a less dramatic 6.3 per cent fall.
- (Financial Times service)
