home starts in us fall to 26 year low

Fall on real estate market around the world is inevitable.....Australia will follow suit....that's why Rudd applied the raise on the 1st home buyers hopeless money....what he wants....ppl more in debt ? unbelivable....


Single-Family Home Starts in U.S. Fall to 26-Year Low

Oct. 17 (Bloomberg) -- Housing starts in the U.S. fell more than forecast in September as construction of single-family homes plunged to the lowest level in a quarter century, indicating the real-estate slump intensified even before the recent credit meltdown.

Construction began on 817,000 houses last month, down 6.3 percent from August's 872,000 level that was lower than previously estimated, the Commerce Department said in Washington. Building permits, a sign of future construction, dropped 8.3 percent to 786,000 pace, the lowest level since November 1981.

Builders will find it difficult to lure buyers into the market after stock prices plunged this month and banks made it harder to qualify for a mortgage. Declines in construction are likely to continue to hurt economic growth well into 2009, extending the housing slump into a fourth year.

``The full impact from the financial meltdown is yet to come,'' said David Sloan, a senior economist at 4Cast Inc. in New York, whose estimate matched the lowest in the Bloomberg survey. ``Housing will be a drag on growth into the middle of next year. The bottom is now looking further away than it did previously.''

Treasury Yields Fall

Treasuries were higher, pushing down yields. The benchmark 10-year note yielded 3.93 percent as of 8:41 a.m. in New York, down 3 basis points from yesterday. Stock-index futures were lower.

Starts were projected to fall to an 872,000 annual pace from a previously estimated 895,000 million in August, according to the median forecast of 74 economists polled by Bloomberg News. Estimates ranged from 840,000 to 935,000.

Compared to September 2007, work began on 31 percent fewer homes.

Construction of single-family homes dropped 12 percent to a 544,000 rate, the fewest since February 1982. Work on multifamily homes, such as townhouses and apartment buildings, climbed 7.5 percent from the prior month to an annual rate of 273,000.

Records Broken

Starts of single-family houses dropped to record lows in three of four regions in September, led by a 24 percent slump in the Midwest.

The biggest housing slump in a generation was showing signs of nearing a bottom when financial markets began to implode in September, leading to the government takeover of mortgage lenders Freddie Mac and Fannie Mae, the failure of banks and a $700 billion government rescue plan this month. Recent events are likely delaying any return to stability.

``These things are putting a new nail'' in the housing market's coffin, David Seiders, chief economist at the National Association of Homebuilders, said in an interview on Bloomberg Television yesterday. ``this sort of vicious feedback loop is still in play.''

The National Association of Home Builders/Wells Fargo index of builder confidence decreased in October to its lowest since 1985, the Washington-based association said yesterday.

Combined sales of new and existing homes have fallen 36 percent from their peaks in mid-2005. Home construction has declined 64 percent from a peak in January 2006. The supply of unsold homes on the market remains above 10 months' worth of sales, signaling homebuilding is likely to continue falling.

Home Prices

Home prices in major cities are down an average of 20 percent from mid-2006, after nearly doubling in the prior six years, according to the S&P/Case Shiller index of 20 metropolitan areas.

Falling prices are contributing to the jump in foreclosures as Americans, trying to refinance adjustable-rate loans, find out they owe more than their homes are worth. The drop in prices also means owners can't tap home equity for extra cash, one reason behind the slowdown in consumer spending.

Homebuilders are still reeling. Lennar Corp., the second- largest U.S. homebuilder, on Sept. 23 reported its sixth straight quarterly loss as potential buyers struggled to get mortgages and rising foreclosures increased the supply of homes on the market.

``The weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards,'' Chief Executive Officer Stuart Miller said in a statement.