US house building slump continues

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The construction of new US homes fell at its fastest rate for almost 25 years in November as the housing downturn showed no signs of easing.

New home starts fell to a seasonally adjusted annual rate of 625,000 from October's revised figure of 771,000.

New home building in both October and November has been at its lowest levels since records began in 1959.

The monthly fall in new house building, a drop of 18.9%, was much bigger than had been expected by most economists.

Building permit applications, taken as a good sign of future activity, fell by 15.6% from October's figure, the Commerce Department said.

Gloomy outlook

Builders continue to be discouraged by the prospects of a housing turnaround.

The new homes report comes a day after other gloomy housing figures.

On Monday, the National Association of Home Builders/Wells Fargo housing market index remained at a record-low level of 9 in December for the second month in a row.

Index readings higher than 50 indicate building firms are positive about the outlook for the housing market.

However, the index fell below 50 in May 2006 and has been below 20 since this April.

"It is going to be a very cold winter indeed for home builders," said Joshua Shapiro, of the forecasting firm MFR.