SF Housing Starts Drop 16%

Single-family housing starts dropped 16% in October as builders finally put the brakes on new construction to stop a huge pile-up of unsold homes.The U.S. Census Bureau reported that single-family starts dropped from a seasonally adjusted annual rate of 1.40 million in September to 1.18 million in October -- the lowest rate in six years. Single-family starts were off 31% from the level recorded in October 2005. Members of the Federal Reserve Board's rate-setting committee noted in the minutes of its Oct. 25 meeting that builders are "cutting back sharply" on starts and offering substantial price incentives to reduce their backlogs of unsold homes. "Several meeting participants noted the considerable strain on some small and medium-sized residential construction firms," according to the Federal Open Market Committee minutes. Meanwhile, a monthly survey by the National Association of Home Builders found that builders expect sales to stabilize and gradually move up in the coming months. Builders are picking up on a "change in market momentum," NAHB chief economist David Seiders said.