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There was a 2.5 percent decrease in July’s housing starts, an indicator of the rate of construction on new homes in the United States, reported the DowJones MarketWatch yesterday.
Five of the last six months have seen declines in the number of housing starts. July’s numbers were 1.8 million on a seasonally adjusted annual basis. MarketWatch cited these statistics from the U.S. Census Bureau. (Click here for a PDF version of the federal report, released yesterday).
The report also listed data for building permits:
Meanwhile, building permits – an indicator that foreshadows future construction activity – plunged 6.5% to 1.75 million annual units for July. This was the sixth straight monthly decline and the largest drop seen since September 1999.
Permits are at their lowest level since August 2002.
A couple of months ago, Will Carless posted this bit of analysis in This Just In. In that post, he quoted from an article predicting that a significant decrease in housing starts reported and building permits obtained would lead to a huge number of job losses.
Here’s some of that analysis:
…one theory that’s been propounded by economists around the country, and is a favorite of our own Alan Gin at the University of San Diego, is that as the housing market cools, there will be significant job losses. Those job losses could manifest themselves as that so-called “economic shock” and that could turn a small problem into a large one.
That “economic shock” Will’s talking about is exactly what many people, including San Diego County Assessor Greg Smith, use to demonstrate the difference between the current housing situation, where falling prices are not directly linked to significant job losses, and the housing boom-and-bust of the late ’80s and early ’90s, when huge numbers of manufacturing job losses created many problems for the housing market and the greater economy.