Housing Starts in December Fall to One-Year Low

(Newsroom America) -- Construction of new homes in the U.S. fell to a one-year low in December, a sign the industry that triggered the recession in the U.S. continues to struggle heading into 2011.

The Commerce Department said new housing starts declined by 4.3 percent last month, to an annualized rate of 529,000, though permits for new construction jumped 16.7 percent.

MarketWatch reported that the increase in permits, which is regarded as a more accurate sign of future homebuilding, meant that housing starts "jumped to an annualized rate of 635,000 in December," which was the highest level since last March.

Still, some analysts said the current glut of homes and continued weak demand meant the industry as a whole was far from stable.

"With sales still near record lows and a lot of unsold properties in the market, there’s very little reason for builders to add more homes to the supply," Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, told Bloomberg News.

"Housing remains a key downside risk to the economy," he added.

Economists tend to watch residential housing starts because of the impact it has traditionally had on the overall U.S. economy.

© 2010 Newsroom America.

Contact Jon E. Dougherty

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