U.S. housing starts slid 4.3% MoM in December to 529k units at an annual rate, which was short of the 550k mark that the consensus had penned in. This was the lowest reading since October 2009 when the economy was struggling to emerge from the recession.
What was even more disconcerting was the 9% plunge in new single-family construction (multi-family is more prone to sharp fluctuations and popped 18%) to a mere 417k annualized units — this was the second decline in the past three months. The past weakness in single-family starts is also filtering into units under construction, which sank 1.1% MoM in December, and down seven of the past eight months. This spells bad news for the residential construction component of the GDP accounts.
With four million foreclosures widely expected this year and next, an already enormous backlog of six million homes in serious delinquency and four million housing excess units already sitting vacant for sale, we can look forward to ongoing weakness in new sales activity and construction, as the National Association of Home Builders revealed yesterday...
Housing has always been the quintessential leading indicator for the broad economy — on the way up, and on the way down.