2010 ends as 2nd worst year for home construction
Wednesday, January 19, 2011
WASHINGTON (AP) — Builders began work last year on the second fewest number of homes in more than half a century, as the weak economy kept people from buying houses.
Builders broke ground on a total of 587,600 homes in 2010, just barely better than the 554,000 started in 2009. Those are the two worst years on records dating back to 1959.
And the pace is getting worse. The Commerce Department reported Wednesday that builders started work at a seasonally adjusted annual rate of 529,000 new homes and apartments last month.
In a healthy economy, homebuilders start about one million units a year. They built twice as many in 2005, at the height of the housing boom. Since then the market has been in decline.
Unemployment remains high. Record numbers of foreclosures have forced home prices down and tight credit has made mortgages tough to come by. Some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.
People are buying fewer single-family homes, which represent nearly 80 percent of the market. Demand fell 9 percent to an annual rate of 417,000 units.
The stagnation in housing is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
One positive sign is that builders appear to be planning more projects in 2011. Building permits, considered a good barometer for future activity, rose 16.7 percent in December to a seasonally adjusted annual rate of 635,000, the best pace since March.