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Housing building in US shows strong rise
By Martin Crutsinger |
April 17, 2010, Saturday
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Print Edition
Print Edition
HOUSING construction in the United States posted a better-than-expected performance in March, rising to the highest level in 16 months on the strength of multi-family homes.
But the US Commerce Department report yesterday showed that construction of single-family homes, the most important segment of the market, declined. It dropped 0.9 percent to an annual rate of 531,000 units, after a strong 5.7 percent increase in February.
The sluggish nature of the housing recovery has helped slow the rebound of the broader economy.
Overall, construction rose 1.6 percent to a seasonally adjusted annual rate of 626,000 last month. That was higher than the 610,000 level that economists had expected. In addition, the government revised February to show a 1.1 percent gain rather than the initially reported drop of 5.9 percent.
Applications for building permits, considered a good barometer of future activity, also recorded a better-than-expected increase, rising 7.5 percent to an annual rate of 685,000.
Analysts are looking for any rebound in housing to be modest at best given the severe problems still facing the industry. These include record home foreclosures and high unemployment, which robs potential buyers of the incomes they need to support a home purchase.
The weakness in single-family construction was offset by an 18.8 percent surge in the smaller multi-family sector, which rose to a seasonally adjusted annual rate of 95,000 units.
Analysts do not expect this strength to continue given a multitude of problems facing commercial real estate at the moment from high apartment vacancy rates to rising foreclosures of commercial properties.
Paul Ashworth, an economist at Capital Economics, noted that even with the March gain, the level of housing construction is still slightly more than one-fourth of where it was during the boom years in the middle of the decade.
He said this burst of activity could well fade after home buyer tax credits expire at the end of this month.
But the US Commerce Department report yesterday showed that construction of single-family homes, the most important segment of the market, declined. It dropped 0.9 percent to an annual rate of 531,000 units, after a strong 5.7 percent increase in February.
The sluggish nature of the housing recovery has helped slow the rebound of the broader economy.
Overall, construction rose 1.6 percent to a seasonally adjusted annual rate of 626,000 last month. That was higher than the 610,000 level that economists had expected. In addition, the government revised February to show a 1.1 percent gain rather than the initially reported drop of 5.9 percent.
Applications for building permits, considered a good barometer of future activity, also recorded a better-than-expected increase, rising 7.5 percent to an annual rate of 685,000.
Analysts are looking for any rebound in housing to be modest at best given the severe problems still facing the industry. These include record home foreclosures and high unemployment, which robs potential buyers of the incomes they need to support a home purchase.
The weakness in single-family construction was offset by an 18.8 percent surge in the smaller multi-family sector, which rose to a seasonally adjusted annual rate of 95,000 units.
Analysts do not expect this strength to continue given a multitude of problems facing commercial real estate at the moment from high apartment vacancy rates to rising foreclosures of commercial properties.
Paul Ashworth, an economist at Capital Economics, noted that even with the March gain, the level of housing construction is still slightly more than one-fourth of where it was during the boom years in the middle of the decade.
He said this burst of activity could well fade after home buyer tax credits expire at the end of this month.
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