The Department of Commerce said today housing permits dropped to their lowest levels in 10 years in April, but that home construction starts still beat expectations.
Builders managed to break ground on new dwellings at an
annual rate of 1.53 million units, up 2.5% in April. Construction of
single-family homes increased 2% to a 1.22-million-unit rate. Work on
multifamily construction increased 6% to 303,000.
Last month’s upturn in construction activity isn’t likely to
continue since housing permits - which signal future construction plans - fell
9% in April to a pace of 1.43 million units. The April figure represents the
slowest annual pace since June 1997. What’s more, that 9% monthly drop was the
sharpest in 17 years. Over the past year, the department says building permits
have dropped 28% and construction starts have dropped 16%.
In other housing news, the National Association of
Homebuilders reported yesterday its confidence index for homebuilders dropped
to 30 for May. This month’s index, also recorded last September, is a 15-year
The monthly report takes into account current single-family
home sales, sales for the next six months, as well as buyer traffic. The index
had been as high as 78 in December 1998. A year ago in May, the index was 46.
Last week, the National Association of Realtors cut
its estimates for new and existing home sale for this year and 2008. The trade
group also said existing homes prices will fall more than it had previously
forecast and that the median price for new homes will fall this year for the
first time since 1991.