Housing starts and permits both fell to their lowest levels in more than a decade, as the latest readings on the battered housing and homebuilding markets came in below expectations Thursday.
Housing starts fell 6.1 percent to an annual rate of 1.38 million in July from a revised 1.47 million rate in June. Economists surveyed by Briefing.com had forecast starts would fall to a 1.41 million pace in June.
The latest reading is the lowest level of starts since January 1997 and is down nearly 21 percent from the year-earlier level.
Builders are really slowing down their constructions, because the backlog of unsold homes continues to climb, home prices continue to decline and the credit crunch means that any buying will be harder.
It is the last factor that worries economists now. Some fear a feedback loop, where the credit shortage will cause homebuilders to slow down further, which will mean less credit and so on.