Housing starts & permits tumble

Housing starts slump to lowest level in 14 years

WASHINGTON (MarketWatch) -- U.S. home builders continued to cut back in September, starting construction on the fewest number of new homes in more than 14 years, the Commerce Department reported Wednesday.

Housing starts fell 10.2% to a seasonally adjusted annual rate of 1.19 million, the lowest since 1.32 million in March 1993. The decline was larger than expected.

Meanwhile, building permits dropped 7.3% in September to a seasonally adjusted annual rate of 1.23 million, the lowest since July 1993 and less than the 1.28 million pace expected by economists surveyed by MarketWatch.

Housing starts are down 30.8% in the past year, while permits have fallen 25.9%.

As usual it's worth remembering that these numbers are volatile and subject to large sampling and other statistical errors.

Permits are generally considered a better indicator of building fundamentals than starts, which can be heavily influenced by weather conditions. The sampling error on permits is also lower.

Separately a new forecast from the Mortgage Bankers Association said it expects originations to fall 18% in 2008 and another 6% in 2009 before recovering. Looks like that Paulson guy is on to something, housing really is a problem.