Home construction plunged last month to its lowest level in 16 years, as builders cut back and their lenders grew wary amid rising delinquent construction loans.
Housing starts plunged 14.2% in December to a seasonally adjusted annual rate of 1.006 million, the slowest pace since 996,000 starts in May 1991. Permits, an indicator of future construction, tumbled 8.1% to a 1.068 million pace, the Commerce Department said.
While builders have been scaling back for many months, some said the end of 2007 was the bleakest period yet in the slump, forcing them to make sharp cutbacks.
“The last quarter was the most challenging environment since the downturn started in July 2005,” said Douglas Smith, president of Miller & Smith, a builder in McClean, Va., which sold 350 homes last year. “All of the ramifications from the mortgage meltdown really took hold.”
Update: According to CNN, in the Detroit area one out of every 138 homes is in foreclosure at the present time,