Housing construction plunged to the lowest level in more than six years in October as the nation’s once-booming housing market slowed further.
The Commerce Department reported Friday that construction of new single-family homes and apartments dropped to an annual rate of 1.486 million units last month, down a sharp 14.6 percent from the September level.
The decline, bigger than had been expected, was the largest percentage decline in 19 months and pushed total activity down to the lowest level since July 2000.
Applications for new building permits, seen as a good sign of future plans, fell for a ninth consecutive month, the longest stretch on record.
The October drop was 6.3 percent, pushing permits down to an annual rate of 1.535 million units, the slowest pace in nine years.
October permit activity is not yet available for the Valley. In September, 2,281 construction permits were issued, compared with 5,409 for the same month in 2005.
“We’re down about 50 percent month to month from the pace of 2005 and year to date we expect to be down about 30 percent overall for new-home permits,” said R.L. Brown, Valley housing analyst. “We don’t expect much change through the balance of this year.”
Brown expects an increase in permits during the fi rst quarter.
“Next year will be better as the inventory balances ... and we end up with a more normal marketplace for new housing,” he said.
David Seiders, chief economist for the National Association of Home Builders, said he believed construction would fall by about 13 percent this year as builders scramble to deal with plunging sales.
“We had an unsustainable boom in housing in both 2004 and 2005 and now we have a correction on hour hands,” he said.
The sharp slowdown in housing this year stands in stark contrast to the past fi ve years, when the lowest mortgage rates in four decades had powered sales of both new and exiting homes to fi ve consecutive records.
The housing weakness trimmed a full percentage point off economic growth in the July-September quarter, when the economy expanded at a tepid 1.6 percent rate.