US August home starts seen at lowest level in 17 years

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WASHINGTON, Sept 17 (Reuters): A record rate of foreclosures probably kept many US home builders off the job last month, pushing the rate of groundbreaking for new homes to its lowest level in more than 17 years, a poll showed.
Housing starts in August are expected at an annual rate of 950,000 units, down from 965,000 in July, based on a median forecast of 78 analysts. It would be the lowest level since March 1991 when starts came in at a 921,000 unit pace.
"Home builders continue to cut housing supply in order to bring inventories down, a process that we expect will continue for several more months," Global Insight said in their research notes.
Permits for future groundbreaking, which give a clue to construction plans, are seen at a 930,000 unit rate in August, down from 937,000 units in July and also at its lowest level in more than 17 years.
"Competition from foreclosures should keep builders from increasing construction," said Lehman Brothers in their housing monitor. "We expect housing starts to bottom in the beginning of next year. This will continue to reduce inventory, bringing supply back to normal by the end of next year."
The data will be released by the commerce department at 8:30am EDT Wednesday.
Tighter credit standards have made it more difficult for potential buyers to win financing and builders have cut activity sharply in an effort to whittle down a big glut of unsold homes.
US Treasury Secretary Henry Paulson said Monday that a correction in housing markets remained a key challenge.