WASHINGTON -- Builders began work last year on the second fewest number of homes in more than half a century, as the weak economy kept people from buying houses.
Builders broke ground on a total of 587,600 homes in 2010, just barely better than the 554,000 started in 2009. Those are the two worst years on records dating back to 1959.
And the pace is getting worse. The Commerce Department reported Wednesday that builders started work at a seasonally adjusted annual rate of 529,000 new homes and apartments last month. That’s a drop of 4.3 percent from November and the slowest pace since October 2009.
A look at the Middle Georgia market shows a big slow down in home building. Five years ago, 587 single-family building permits were issued in Bibb County, compared to 100 in 2010. However, the number of permits was basically the same as in 2009 when 99 permits were issued in Bibb County.
The story is about the same in Houston County when 168 permits were issued in 2010, compared to 499 in 2006. However, there is a slight uptick in the number of permits from 2009 when 150 permits were issued.
“The good news is that it appears that the free fall in new home construction ended in 2010,” Jeffery Humphreys, director of the Selig Center for Economic Growth, Terry College of Business at the University of Georgia, said last week at a local economic meeting. Activity will turn up in 2011, But the upturn will be insignificant compared to the recent plunges in activity. Meaningful recovery for housing is still many years away, Humphreys said.
In a healthy economy, home builders start about one million units a year. They built twice as many in 2005, at the height of the housing boom. Since then the market has been in decline.
Unemployment remains high. Record numbers of foreclosures have forced home prices down and tight credit has made mortgages tough to come by. Some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.
People are buying fewer single-family homes, which represent nearly 80 percent of the market. Demand fell 9 percent to an annual rate of 417,000 units. Apartment building increased 17.9 percent to an annual rate of 112,000 units.
The stagnation in housing is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
One positive sign is that builders appear to be planning more projects in 2011. Building permits, considered a good barometer for future activity, rose 16.7 percent in December to a seasonally adjusted annual rate of 635,000, the best pace since March.
But builders likely pulled more permits in California, New York and Pennsylvania ahead of code changes in 2011 -- a factor that likely influenced the spike.
“Some builders went ahead in December with projects to beat the change,” said Jennifer Lee, an analyst at BMO Capital Markets.
Lee points out that the biggest gains were in the Northeast, which was up 80.6 percent, and the West, up 43.9 percent.
Housing construction fell in all parts of the country in December except the West, where activity surged 45.8 percent. Construction dropped 38.4 percent in the Midwest and was down 24.7 percent in the Northeast and 2.2 percent in the South.
Severe winter weather likely affected activity in the Northeast and Midwest.
Telegraph writer Linda S. Morris and Associated Press writer Martin Crutsinger contributed to this report.