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Posts Tagged ‘building’

Just released Commerce Department figures indicate that U.S. housing starts dropped to a record low of 458,000 in April.

A 13% decline to an annual rate of 458,000 was led by a 46% decline in multi-family starts, compared to March when builders broke ground on 525,000 homes.

Building permits, which are a sign of future construction fell by 3.3% to a record low rate of 494,000 and taken together the two declines suggest that house prices have not yet reached rock-bottom.

So called experts had forecast an increase to a 520,000 annual pace from a 510,000 previously estimated pace the prior month, and they also forecast that building permits would increase to 530,000 annual rate.

But to give credit where it’s due, Maxwell Clarke, who is the chief U.S. economist at IDEAglobal Inc said even before the report came out that, “Weakness in housing continues. Declining prospects for developers should continue to act as a drag on investment and overall output in 2009″.

Mixed in with the bad news was a little good news however, because construction of single-family homes rose 2.8% to a 368,000 rate, and that was for the second straight month.

Overall the housing market is showing some signs of stabilization and confidence amongst U.S. homebuilders in May increased to the highest level since September, and although sales of new homes are still 70% below their 2005 highs, they have risen slightly from their record January lows.

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After reaching a three-decade low of 55.3 in November, the Reuters/University of Michigan preliminary index of consumer sentiment rose to 58.5 from 57.3 in March, based on an average of sixty one estimates, and it is hoped than an improvement in confidence may help sustain a recovery in consumer spending, which accounts for 70% of the U.S. economy.

The Commerce Department said yesterday (April 16th) that builders broke ground at an annual rate of 358,000 on single-family homes in March, which although unchanged from the previous month, suggests that the housing market may have reached bottom, and The National Association of Home Builders/Wells Fargo confidence index also rose this month to its highest level since October.

James O’Sullivan, who is a senior economist at UBS Securities LLC in Stamford, Connecticut said, “The economy has started to show signs of improvement. Given all the policy action and mortgage rates coming down, we are starting to see less pessimism”.

Federal Reserve Chairman Ben S. Bernanke said just one day before the report was made public that, “the signs of stability make for a potential first step toward a recovery from the downturn that started in December 2007″.

Other encouraging news is that reports by the Philadelphia Fed and New York Fed earlier this week showed manufacturing shrinking at a slower pace this month, and according to the Labor Department, the number of Americans applying for first-time jobless benefits unexpectedly dropped last week to the lowest level in almost three months.

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