Multifamily Knocks Housing Starts

Multifamily Knocks Housing Starts WASHINGTON, DC - Despite talk of stability and glimmers of recovery, the construction industry and home builders appear to be a long way from a rebound. New home construction fell to its lowest pace on record in April, the government reported on Tuesday, disappointing forecasters, who had hoped for a modest increase. Building permits fell to record lows and construction on new multifamily units plunged.

Housing starts were down 12.8 percent last month from March, to an annual pace of 458,000.

The results showed that the housing market remained weak, even as home builders reported that they were regaining some confidence and as prices began to fall at a slightly slower pace.

"There's just simply too much supply on the market, and construction starts will have to continue to contract," said Joseph Brusuelas, director at Moody's

A glut of foreclosure properties also continues to flood the market, and many potential buyers are still hesitant to enter as unemployment continues to rise. The one bright spot was construction of single-family homes, which rose for a second month, this time by 2.8 percent to an annual pace of 368,000 units, the Commerce Department reported, even though they were down 45.6 percent from last year's levels. Construction of apartments and multifamily dwellings, however, plunged 42.2 percent for the month. Although data on multifamily construction is volatile, housing analysts said the drop in apartment and condominium construction reflected the excess supply and tight markets for construction loans on larger projects.

Housing permits fell less severely than housing starts, slipping 3.3 percent in April to an annual rate of 494,000. Economists said the stability in single-family construction was somewhat encouraging. "These figures add to the evidence of potential stabilization in that part of the industry," Michael D. Larson, an analyst at Weiss Research, wrote in a research note.

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