WASHINGTON (AP) — Housing construction plunged in June to the lowest level since October as the economy remained weak and demand plummeted. þþThe Commerce Department said Tuesday that the construction of new homes and apartments fell 5 percent in June from a month earlier to a seasonally adjusted annual rate of 549,000. May’s figure was revised downward to 578,000. þþDriving the June decline was a more than 20 percent drop in the volatile condominium and apartment market. Construction of single-family homes, the biggest part of the market, was down slightly. It dropped 0.7 percent. þþOne bright spot was an increase in building permit applications, which is a sign of future activity. They rose 2.1 percent from a month earlier to an annual rate of 586,000. þþStill, the slumping job market and competition from foreclosed properties have forced builders to limit construction, especially after tax credits that spurred sales expired at the end of April. þþ“Despite record low mortgage rates, housing is at risk of a double dip unless job growth strengthens soon,” senior economist at BMO Capital Markets, Sal Guatieri, said. þþEconomists had predicted that construction would fall to a rate of 580,000 and had projected that building permits would sink to a rate of 570,000, according to Thomson Reuters. þþIn a typical economic recovery, the construction sector provides much of the fuel. But not this time. While developers have cut back on construction and the number of new homes on the market has fallen substantially, they still must compete against foreclosed homes selling at deep discounts. þþBuilders have been feeling increasingly pessimistic of late. The National Association of Home Builders said Monday that its monthly reading of builders’ sentiment about the housing market sank to 14 — the lowest level since March 2009. Readings below 50 indicate negative sentiment about the market. þþEach new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the builders’ trade group. The impact appears in multiple industries, from makers of faucets and kitchen appliances to lumber yards. þþThe rate of home building is still up about 15 percent from the bottom in April 2009, though it is down 76 percent from the last decade’s peak in January 2006. þþNew home sales in May dropped 33 percent to the slowest pace in the 47 years records have been kept. The drop-off came immediately after the tax incentives to sign a contract on a home ended on April 30. þ
Source: NY Times
