August was a terrible month for the US economy.
Builders broke ground on fewer homes in August, a reminder that the housing market remains depressed.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That’s less than half the 1.2 million that economists say is consistent with healthy housing markets.
Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.
Hurricane Irene also slowed construction in the Northeast.
September’s stats will probably show a bit of growth, due again to Irene. The slide in home building means quite a bit for the economy.
While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Add to this, that 40% of Americans believe their home will decline in value over the next year:
The latest Rasmussen Reports national telephone survey shows that 40% of U.S. homeowners now expect their home’s value to go down over the next year, the highest level of pessimism to date. Prior to the latest finding, this number ranged from a low of 19% to a high of 37% since April 2009.
None of the president’s plans address this fundamental weakness in the economy. His plans are all about politics.