Tuesday May 19, 06:58 PM
US housing construction falls to new lows
By Veronica Smith
WASHINGTON (AFP) - US housing construction starts and permits slumped to fresh lows in April, government data showed Tuesday, but analysts saw a ray of hope in a rebound in the key single-family home sector.
The number of construction permits on new US homes and apartments fell 3.3 percent from March to an annual rate of 494,000, the Commerce Department said.
The pace was the weakest since the data began to be tracked in 1960 and eclipsed the prior record slump in March of a revised 511,000 permits.
The April lurch lower surprised most analysts, who had expected the forward-looking indicator on construction permits to increase to 530,000.
New construction on homes plunged 12.8 percent to an annual rate of 458,000 units, the lowest level since that data began to be tracked in 1959.
Most analysts had expected the rate to hold steady from March at 525,000 starts. The April pace wiped out the prior record low 488,000 rate in January.
On an annual basis, housing starts were down 54.2 percent and permits 50.2 percent from their April 2008 levels.
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 clear end in sight to the crisis.
However, analysts noted encouraging signs in the data, including an easing in the decline in permits, which had plunged 7.1 percent in March.
Single-family homes, the lion's share of the US housing market, saw a 3.6 percent rise in building permits and a 2.8 percent increase in new construction.
Ian Shepherdson at High Frequency Economics noted that the entire decline in both April starts and permits was "in the hyper-volatile and hyper-depressed multifamily sector."
Construction starts on five units or more of housing plummeted 42.2 percent in April and permits dropped 21.4 percent, the data showed.
"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.
Patrick Newport at IHS Global Insight said the ugly numbers in the multifamily sector were due to financing, with some builders buried in debt and others unable to find financing in the current slump.
"Going forward, multifamily starts have hit or will soon hit bottom -- they simply cannot fall much further," Newport (NASDAQ: NEWP - news) said.
"Single-family starts may continue to test the bottom. In the second half of this year, however, they will be on a sustained but slow path to recovery," he added.
A rebound in housing starts and permits in February appeared to have been 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."
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
