WASHINGTON - Housing construction fell last month - with single-family activity dropping to the lowest level in more than 16 years, the government reported yesterday.
Construction of all new homes and apartments dropped 3.7 percent last month from October to a seasonally adjusted annual rate of 1.187 million units, the Commerce Department said.
Construction of single-family homes fell even more - 5.5 percent, to an annual rate of 829,000 units. It was the eighth consecutive drop in single-family starts, pushing activity in that segment to the lowest since April 1991.
In a further sign of trouble, home builder Hovnanian Enterprises Inc. said late yesterday that it had lost four times as much money in its fiscal fourth quarter compared with a year earlier because of fallout from the housing downturn and an accounting charge. The Red Bank, N.J., company reported a loss of $469.3 million, or $7.42 a share, for the quarter ended Oct. 31. That compared with a loss of $117.9 million, or $1.88 a share, for the same period a year earlier.
The building of apartment units rose 4.4 percent last month to an annual rate of 332,000, the Commerce Department said.
In an ominous sign for future activity, the government reported that applications for building permits fell for a sixth straight month, dropping 1.5 percent to a seasonally adjusted annual rate of 1.15 million units, the slowest pace for building permits since June 1993.
The overall construction decline left home building 24.2 percent below the level of activity a year ago. After five straight years of record sales and soaring prices, housing has been in a serious downturn for two years.
Analysts expect the weakness to intensify in coming months, possibly becoming enough of a drag to push the country into a full-blown recession.
"The housing recession continues to grind away," said Brian Bethune, an economist at Global Insight Inc., of Boston. "The housing market is now navigating through perfect-storm conditions."
He said a downward spiral in sales was being exacerbated by the severe credit crunch - in which banks were sharply tightening loan standards and lending less money - and rising mortgage foreclosures, which were dumping more homes on an already-glutted market.
Bethune predicted that housing would subtract 1.5 percentage points from overall U.S. economic growth this year and the first three months of 2008.