- The Washington Times - Friday, July 18, 2008

A beat-the-deadline rush to file permits for apartment construction in New York City lifted housing starts to unexpectedly high levels in June, but it was no cause for rejoicing. Construction of single-family homes nationwide fell to the slowest pace in 17 years.

Builders started work on single-family homes at an annual rate of 647,000 units last month, a drop of 5.3 percent from the previous month, the Commerce Department reported Thursday. It marked the slowest pace for singe-family activity since January 1991, another period when housing was going through a severe downturn.

That decline in single-family construction was in contrast to a 42.5 percent surge in apartment building, an increase that was attributed to a change in New York City building codes that triggered a rush by builders to take out applications before new regulations took effect on July 1.

In the way the government presents the housing statistics, a big increase in one area can greatly influence the overall figure because the change for one month is multiplied by 12 to get an annual figure.

With the big surge in apartments in New York, total construction rose by 9.1 percent to a seasonally adjusted annual rate of 1.066 million units, still 26.8 percent below the level of a year ago. Economists said they expect that figure to resume a downward slide in coming months given all the problems facing housing.

The housing industry, which has been in a slump for more than two years, is struggling to cope with record levels of unsold new and existing homes. That glut is being expanded by swelling levels of foreclosures.

Buyers are reluctant to purchase a home with home prices still falling sharply and even those buyers who are ready to commit are having trouble qualifying for a loan as lenders tighten standards in response to soaring mortgage delinquencies.

The report on housing construction showed that applications for building permits, considered a good sign of future activity, rose by 11.6 percent to a seasonally adjusted annual rate of 1.091 million units. This increase was also skewed by a big rise in applications in New York, however.

Housing construction soared by 102.6 percent in the Northeast, reflecting the New York City surge, but fell by 12.8 percent in the Midwest, 9.4 percent in the West and 1.4 percent in the South.

Separately, the Labor Department reported that the number of newly laid-off people signing up for jobless benefits rose by 18,000 last week to 366,000, the highest level since late June. The increase was below the number that economists had been expecting.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide