Home starts plunge in the Treasure Valley and across the nation

Construction of U.S. homes unexpectedly plummeted last month to its lowest point since April, the Commerce Department said Wednesday.

The weak figures show that builders still lack confidence that buyers can soak up the glut of unsold homes already on the market - a supply magnified by a record number of home foreclosures.

"I'm very guarded," said Ron Whitney, owner of Whitney Homes in Boise and president of the Idaho State Building Contractors Association.

"The big thing I always look at is unemployment, and we need to see a change in the unemployment rate if we're going to see a change in the housing market."

The construction figures also illustrate how much the fledgling recovery depends on government support. Builders broke ground on fewer homes in part because of uncertainty in October about whether Congress would extend a tax credit for homebuyers. Earlier this month, lawmakers renewed the credit and extended it to more buyers.

The report on home construction said building of homes and apartments fell 10.6 percent in October to a seasonally adjusted annual rate of 529,000, from an upwardly revised 592,000 in September. Economists polled by Thomson Reuters had expected a pace of 600,000.

Applications for building permits, a gauge of future activity, fell 4 percent to an annual rate of 552,000 units. That was the lowest since May and missed analysts' expectations of 580,000. But permits for single-family homes fell only 0.2 percent.

In Ada County, single-family permits fell 65 percent year over year for January through October - from 354 in 2008 to 121 in 2009. In Nampa, permits were down 68 percent in the same 10-month period from 167 in 2008 to 54 in 2009. Single-family dwelling permits in Boise increased by two from 159 to 161.

Jeff Thredgold, an economic consultant for Zions Bank, said new home starts are going to be soft for the next 12 months and existing home sales will stabilize. And he doesn't believe the deadline for taking advantage of the tax-credit in April will impact the housing market as much as the uncertainly over its extension did in October.

"It's probably the middle of next year before there are more positive signs of the Idaho economy moving out of its own recession in tandem of Utah and Colorado," Thredgold said.

Statesman reporter Sandra Forester contributed to this report.