Tuesday May 19, 02:59 PM
US home building starts, permits fall to record lows
By Veronica Smith
WASHINGTON (AFP) - US housing starts and building permits slumped in April to record lows, highlighting the crisis in the real-estate sector as the economy struggles with recession, government data showed Tuesday.
But analysts pointed out that the declines were in the volatile multi-family sector, and that single-family numbers pointed to the beginnings of stabilization.
The number of construction permits on new US homes fell 3.3 percent from March to an annual rate of 494,000, the Commerce Department reported in seasonally adjusted data.
The pace was the lowest since the data began to be tracked in 1960 and eclipsed the prior record set in March of a revised 511,000 permits.
The April lurch lower surprised most analysts, who had expected a rebound in the indicator of the future direction of the housing market, to 530,000 permits.
Housing starts plunged 12.8 percent from March, to an annual rate of 458,000 units, the lowest level since that data began to be tracked in 1959.
The slow rate in construction of new homes also overturned market expectations that the pace would hold steady from March at 525,000 starts.
The prior record low in housing starts was struck in January at 488,000. April starts were 54.2 percent below their April 2008 level.
On an annual basis, the number of construction permits was 50.2 percent below the April 2008 level.
The building permits number takes the pulse of the housing market, which fell off a cliff two years ago and has been deteriorating amid a severe recession and tight credit.
Although President Barack Obama's administration has made stabilization of the real-estate sector a key basis for recovery in the world's biggest economy, the grim data signaled no end in sight to the crisis.
Ian Shepherdson at High Frequency Economics highlighted that the entire drop in both starts and permits was "in the hyper-volatile and hyper-depressed multi-family sector."
Single-family housing starts rose 2.8 percent in April from March, while permits for building single-family homes rose 3.6 percent, the Commerce Department reported.
"The monthly numbers are not reliable but the three-month averages for single-family home activity have bottomed out," Shepherdson said.
"Markets trade on headlines but the details of this report are less bad," he added.
A rebound in housing starts and permits in February appeared increasingly a blip in a steady housing sector decline that has wiped out homeowners' wealth and led to rising foreclosures.
"If household formation is running between 1.0-1.2 million families a year, then a demand gap is in existence that will continue to help reduce the massive inventories in housing," said Andrew Busch at BMO Capital Markets.
"The pervading question is whether rising unemployment will invoke rising foreclosures that will overwhelm this demand gap."
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