| Red October for Residential Construction |
| Written by Jonathan Smoke | |
| 11.19.2008 | |
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Discuss this article on the forums. (0 posts) The Commerce Department reported preliminary permits and starts data for October today, and the declines were pretty much as bad as expected. Total building permits in October were at a seasonally adjusted annual rate of 708,000, which is 12% below the revised September rate of 805,000 and 40% percent below the revised October 2007 estimate of 1,182,000. Single-family permits, the better barometer of homebuilding, came in at a rate of 460,000 units in October, which is 14.5% below the September rate of 538,000. All of these declines were statistically significant. Correspondingly, total housing starts in October were at a seasonally adjusted annual rate of 791,000, which is 4.5 percent below the revised September estimate of 828,000. That change is not statistically significant, but the comparison to last year is—38% below the revised October 2007 rate of 1,275,000. Single-family housing starts in October were at a rate of 531,000 units, which is 3.3% below the September figure of 549,000. That monthly change is not statistically significant. We are officially at a new recorded low for new permits—the 708,000 seasonally adjusted annual rate in October is lower than the previous record set in 1981. The total permit data series goes back to 1960. Considering the US is much larger now than in 1960, this low is significant. The other October readings weren’t new lows, but they were darn close. Judging by the homebuilder sentiment reading published by NAHB and Wells Fargo yesterday, we should set new lows in all categories before year end. Perhaps this is the moment of full capitulation that the market needs before it can improve. 
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