No good signs for housing market
A new home for sale in North Aurora, Ill.
KAI RYSSDAL: It goes from bad to worse in the housing industry.
New-home construction plunged 14 percent last month. Residential building's at its lowest point in 10 years. Part of that January drop was after a warm December, where contractors broke ground on an unusually high number of houses. But a look at the year-over-year numbers takes the wind out of those sails pretty quickly. From January '06, housing starts are down 38 percent.
Ashley Milne-Tyte has more on what looks like a never-ending search for the bottom of the housing market.
ASHLEY MILNE-TYTE: The drop was far greater than Wall Street expected, and came after a couple of months of gains. Real estate analyst Mike Larson is with Weiss Research. He says the negative numbers represent the fallout from the housing boom, and all that frenzied constructiona€¦
MIKE LARSON: It just goes back to the fact we have so many empty homes on the market, that builders have no incentive to build. They have to work through all those homes they have for sale on the market.
Not to mention the homes individuals are looking to sell. He says it'll take a big decline in construction to work off the inventory. Ken Simonson is chief economist with the Associated General Contractors of America. He agrees the housing market is still months away from touching bottom. Bad news for home builders and their employees . . .
KEN SIMONSON: More than a hundred thousand jobs have disappeared over the last year in home building and I think that we're gonna see a further contraction.
Still, he says, the economy as a whole can withstand the fall in home building pretty well.
In New York, I'm Ashley Milne-Tyte for Marketplace.