Homebuilding: Sharpest drop in 27 years (Chris Isidore)

Created by : Francis Goodwin View profile

Steeper than expected plunge in December ends year that saw home building, permits post declines not seen since past recessions.

By Chris Isidore, CNNMoney.com senior writer

Jan. 17, 2008 -- NEW YORK (CNNMoney.com) -- Housing starts and building permits plunged in December much more than expected, resulting in a full-year decline in new home construction that was the sharpest drop in 27 years.

And there is little sign things will get better soon. According to government data released Thursday, the full-year total for building permits posted the biggest drop in 33 years. The sharp dropoff in building is one of the reasons that many leading economists are growing increasingly fearful that an economic recession is near, if it hasn't already struck.

The pace of housing starts in December dropped 14 percent to a seasonally-adjusted annual rate of 1.01 million in December, according to the Census Bureau report.

That figure is down from the 1.17 million November reading, which was also revised lower. Economists surveyed by Briefing.com had forecast the annual pace of starts would fall to 1.15 million in the latest reading.

The level of starts in the month was the weakest since May 1991, when the country was just coming out of the 1990-91 recession.