US new home construction drops 4.5% in Oct

19 November 2008 14:42  [Source: ICIS news]

WASHINGTON (ICIS news)--US new home construction continued its downward spiral in October, falling 4.5% from September and 38% below the same month last year, the Commerce Department said on Wednesday.

 

The department said that building permits issued in October were also down by a sharp 12% from September, indicating that the home construction sector is set for still further declines in the months ahead.

 

Building permits are issued by local governments when contractors are ready to begin construction on new homes and are seen as a reliable indicator of near-term prospects for the housing sector.

 

New home construction is a key downstream consuming sector for the chemicals industry, driving demand for a wide variety of chemicals and chemicals-based products such as plastic pipes, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

 

The department said that the number of housing starts in October were at a seasonally adjusted and annualised rate of 791,000, compared with 828,000 in September and 1.275m in October 2007.

 

Before the US housing crash began in early 2006, some economists believed that the sector could reasonably expect to see an annual minimum of 1m new homes being built.

 

The decline in October’s building permits was even more pronounced, with only 708,000 construction authorisations issued, on a seasonally adjusted annual basis, compared with 805,000 in September, a 12% drop.

 

October’s building permits were 40.1% below the 1.18m construction authorisations issued in October 2007.

 

The fall in October’s housing starts follows a 6.3% decline in September from August.

 

The housing stimulus package passed by the US Congress in August appears to have had little impact on new home construction. 

 

Home builders hoped that measure, the Housing and Economic Recovery Act, would offer a $7,500 tax (€5,925) credit to first-time buyers of new or existing homes.

 

US housing starts

	Oct '08	Sept '08	Sept-Oct ‘08	Oct ‘07	Oct ’07 to Oct ‘08
US housing starts	0.791m*	0.805m*	- 4.5%	1.275m*	- 38%

* Seasonally adjusted & annualised

 

($1 = €0.79)

 

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By: Joe Kamalick
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