New residential construction slumps in June
New residential construction dropped in June, another indication that the U.S. housing market is struggling.
Single-family home construction fell 0.7% in June from May and construction for apartment buildings fell harder.
“The housing industry remains stuck in a rut, with both sales and construction activity moribund,” said Michael D. Larson, an interest rate analyst with Weiss Research. “Builders simply lack the confidence -- or in some cases, the financing -- to ramp up construction, especially in the wake of the home buyer tax credit's expiration.”
The poor read on starts follows news on Monday that builder confidence in the new home market sank to its lowest level in more than a year, according to an industry index. Home sales plunged 33% in May, the latest month of sales figures released, and many economists expect a difficult year for builders now that a popular federal tax credit for buyers has expired.
Another indicator of future activity released by the government Tuesday, building permits, showed a 2.1% increase in June over May to a seasonally adjusted annual rate of 586,000. But that was a decrease of 2.3% below the June 2009 estimate.
And permits for single-family homes dropped 3.4% in June from May, to a seasonally adjusted annual rate of 421,0000. That indicates that single-family home starts are likely to drop again in July, said Patrick Newport, U.S. economist for IHS Global Insight.
“The key for housing going forward is job growth,” Newport said.
-- Alejandro Lazo