Workers build a house in a planned community in Azusa in November. The project… (Kevork Djansezian, Getty…)
New-home construction slumped last month, falling 4.3% from November to December, the government said Wednesday.
The month-over-month decline was worse than expected by economists, and construction starts fell 8.2% compared with December 2009 to a seasonally adjusted annual rate of 529,000 units, the Commerce Department reported. A 9% drop in single-family home construction drove the decline from November to December.
The news comes one day after the National Assn. of Homebuilders reported that builder sentiment, according to its index, was unchanged at the low level of 16 in January. A reading below 50 shows negative sentiment about home sales.
And in California, new-home sales posted a record-low year in 2010, according to San Diego research firm MDA DataQuick, whose data go back to 1988.
"There is little evidence that conditions warrant a significant and sustained rise in home building," Paul Dales, U.S. economist with Capital Economics, wrote in a research note Wednesday.
The number of building permits issued in December, another gauge of home-builder sentiment, increased 16.7% over November but was down 6.8% from December 2009. Permits were issued at a seasonally adjusted annual rate of 635,000.
But Dales noted that much of the increase was probably a result of builders' filing permits to get ahead of changes in building codes in California, Pennsylvania and New York state that took effect this year.