November Housing Starts Sharply Decline

WASHINGTON D.C. - The number of housing projects builders broke ground on in November plunged 13.1 percent from the previous month to a seasonally adjusted annual rate of 1.77 million units, the Commerce Department reported Thursday.

November's drop marked the biggest decline in nearly 11 years and pulled down housing starts to the lowest level since May 2003.

?EUR??,,????'??I've been preaching to the builders to keep an eye on their inventories of unsold homes, especially with the Federal Reserve raising interest rates,?EUR??,,????'?? said David Seiders, chief economist at the National Association of Home Builders. ?EUR??,,????'??So I really hope this is builders exercising some discipline here to get inventories down.?EUR??,,????'??

The Federal Reserve on Tuesday raised interest rates for the fifth time since June and signaled it was likely to keep pushing them higher at a ?EUR??,,????'??measured?EUR??,,????'?? pace in 2005.

The latest quarter-point increase raised the federal funds rate, the interest that banks charge each other, to 2.25 percent, more than double the 46-year low of 1 percent in effect when the Fed kicked off its credit-tightening campaign six months ago.

Thursday's housing report showed widespread weakness, with starts down 14.2 percent in the Northeast, 19.4 percent in the Midwest, 13.2 percent in the West and 10.4 percent in the South, which boasts the lion's share of housing activity.

Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1.988 million. This is 1.5 percent below the revised October rate of 2.018 million, but 3.5 percent above the November 2003 estimate.

Privately-owned housing completions in November were at a seasonally adjusted annual rate of 1.705 million, which is 6 percent below October's revised estimate of 1.813 million and 0.2 percent below the November 2003 rate.

Single-family housing completions in November were at a rate of 1.424 million, 5.6 percent below October's rate. The November rate for units in buildings with five or more units was 261,000.