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Quick Hits: House Construction a Non-Starter


Brief scrutiny of today's headlines.

Housing construction fell 6.2% in August to a seasonally adjusted annual rate of 895,000 units, the US Commerce Department reports.

That's the slowest pace since January 1991. Analysts expected construction to dip 1.6%.

August's 6.2% drop in housing construction included a 1.9% drop in single-family construction to an annual rate of 630,000 units. Construction of multi-family housing fell 15.1% to an annual rate of 265,000 units.

The declines left building activity 33.1% below last year's level for August. Analysts expect the decline to continue as builders struggle to cut the inventory of unsold new houses.

Building permits, an indicator of future activity, fell in August to an annual rate of 854,000 units, about 8.9% below the revised July seasonally adjusted rate of 937,000 units and about 36.4% below the revised August 2007 estimate of 1.3 million, the Commerce Department says.

August's construction activity declined in all regions of the nation except the West, where it increased about 1,000 units from July's total. Building activity fell 14.5% in the Northeast, 13.6% in the Midwest and 7.4% in the South.

The news won't reassure Wall Street, already shaken by the bankruptcy of Lehman (LEH) and an emergency loan to the nation's largest insurance company, American International Group (AIG). The government also took control of the nation's two largest mortgage finance companies, Fannie Mae (FNM) and Freddie Mac (FRE).

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