Housing construction in the USA fell last year the most in 27 years

Washington - The construction of residential properties in the USA plunged by 25 percent for the entire last year, the steepest decline in 27 years, and the drop continued at the end of the year. The number of housing starts fell by 14.2 percent in December compared to the previous month, reaching the lowest level in nearly 17 years. Today's data from the U.S. Department of Commerce revealed a deepening crisis in the housing market, which poses a risk of the world's largest economy slipping into recession.
Construction companies started construction on 1.006 million homes in December on a seasonally adjusted basis, the lowest since May 1991. This was also significantly below economists' estimates, who expected a figure of 1.14 million.
For the entire last year, construction was started on 1.354 million residential units in the USA, the lowest since 1993. The rate of decline was the steepest since 1980, when it reached 26 percent, and was the second highest in the post-war period.
The issuance of new building permits, which is an indicator of future construction activity, was the weakest in 15 years. The number of building permits issued fell by 8.1 percent in December to an annualized 1.068 million, the lowest since March 1993. Economists had expected a figure of 1.14 million, according to Reuters.
The American housing market fell into a slump last year, leading to the mortgage crisis and subsequent shocks in global financial markets. Due to the mortgage crisis, large American and global banks must write off tens of billions of dollars in investment losses. Problems have already begun to impact consumers, who are cutting back on purchases, and companies that are reducing investments and stopping hiring new employees. Economists warn of a potential recession in the USA this year, and the government is preparing a package of stimulus measures.
Economists generally believe that the housing market crisis will continue in the USA. Some think it could resemble the decline of the late 1970s and early 1980s when residential property construction fell for four consecutive years and only began to recover after the severe recession of 1981-82.