NEW YORK, Oct. 17, 2008
Big Drop In New Home Construction
Report Shows Builders Cut Production In September To Lowest Level Since 1991
-
The housing market is weak in many parts of the country. It was led by a 20.9 percent drop in the Northeast, where construction of single-family units dropped to the lowest level on record. (Christian Science Monitor)
-
Timeline Financial Meltdown Track major events that lead to one of the most tumultuous times in Wall Street's history.
-
Interactive Eye On The Economy In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
The Commerce Department reported Friday that construction of new homes and apartments dropped by 6.3 percent last month, a much bigger decline than the 1.6 percent decrease that had been expected. It pushed total production to a seasonally adjusted annual rate of 817,000 units. That's the slowest pace since January 1991, a period when the country was in a recession and going through a similar painful housing correction.
The declines last month reflected weakness in many parts of the country. It was led by a 20.9 percent drop in the Northeast, where construction of single-family units dropped to the lowest level on record.
In response, the Dow opened lower, falling nearly 200 points in opening trading before stablizing.
However, investors appeared to look past a reading on October consumer sentiment, perhaps because it was expected after a stream of other negative data on consumers. A weaker-than-expected report on retail sales Wednesday made clear that consumers nervous about the economy and the faltering stock market are less willing to pull out their wallets. The Reuters/University of Michigan's index of consumer sentiment fell to 57.5 from 70.3 in September.
Meanwhile, President George W. Bush delivered a speech to the U.S. Chamber of Commerce, and promised that the government would not take control of the private banking firms it recently bailed out as part of the $700 billion economic rescue package.
It's been an erratic week on Wall Street, with the Dow soaring more than 900 points on Monday, slipping moderately Tuesday, sinking more than 700 points Wednesday, and then rallying 400 points Thursday. The volatility is not providing investors with much relief, but it is a welcome change from last week's seemingly relentless plunge, during which the Dow logged its worst week ever and Wall Street lost about $2.4 trillion in shareholder wealth.
The credit markets have been improving after moves by governments around the world, particularly plans to buy stakes in private banks to boost their lending. But there's still high demand for Treasury bills, regarded as the safest assets around, an indication that there is still much fear in the markets.
The three-month Treasury bill Friday yielded 0.51 percent, up from 0.47 percent on Thursday, indicating only a marginal let-up in demand. The yield has not gone above 1 percent in more than a week.
The dollar rose against most other major currencies.
Markets overseas were mostly higher.
In Asia, Hong Kong's Hang Seng index dropped over 4.44 percent to its lowest level in almost three years, but Japan's Nikkei average rose 2.78 percent after an 11.4 percent loss Thursday. In Europe, Britain's FTSE index traded up 0.66 percent, Germany's DAX index rose 0.21 percent, and France's CAC-40 rose 0.96 percent.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
Posted by GrabAndGo
And what a surprise! with the glut of FORECLOSED vacant houses up for fire sale prices by banks why would anyone BUILD NEW??