From the AP:
Housing construction plunged in October as builders slashed activity to the lowest level in more than six years.
Further declines were expected as the five-year housing boom turns into what is being called a “housing recession.”
“A tornado hit the housing sector in October,” said Joel Naroff, chief economist at Naroff Economic Advisors, a private forecasting firm. “Builders have seen the light from the housing market meltdown and are now moving as rapidly as possible to reduce supply.”
In New Jersey, Hovnanian Enterprises Inc. in Red Bank, the state’s largest home builder, warned last week that cancellations of orders continued to increase in its most recent quarter, “driven in part by the inability of buyers to sell their existing homes.”
Later in the week, Hovnanian notified West Milford officials that it will not be seeking a water permit to build a 288-unit town house project. The builder cited the difficulty of winning approvals, and the time it would take to sell the units.
Last month, Kara Homes of East Brunswick filed for bankruptcy.
Housing, which had been one of the U.S. economy’s standout performers during a five-year boom, shaved about a percentage point off growth in the July-September quarter. That pushed overall economic activity as measured by the gross domestic product down to an anemic rate of just 1.6 percent, the slowest growth in more than three years.
Many economists predicted that GDP growth would be trimmed by a similar amount in the current quarter as housing continues to act as a drag, through lower sales and reduced building activity. Construction in October stood at 27.4 percent below the level of activity a year ago, the biggest year-over-year decline in more than 15 years.
“The scale of the yearly decline is now in housing recession territory,” said Brian Bethune, chief economist at Global Insight, a Lexington, Mass., forecasting firm.