U.S. Housing Starts Unexpectedly Drop to Five-Month Low
By Alex Kowalski - Apr 17, 2012 8:37 AM ET
Builders began work on fewer homes than forecast in March, signaling a sustained industry recovery will take time to get underway.
Housing starts dropped 5.8 percent to a 654,000 annual rate, less than the lowest estimate of economists surveyed by Bloomberg News and the least since October, Commerce Department figures showed today in Washington. The slump was led by the volatile multifamily category, which at the same time showed a jump in permits, a proxy for future construction.
While warmer weather may have spurred home construction at the beginning of 2012, a competing supply of cheap existing properties may be steering potential buyers away from purchasing a new home. That means home construction may not help boost the economy in 2012.
“The main problem is still the oversupply of existing homes, and we expect that to worsen this year as foreclosures increase significantly, which would unfortunately push prices down,” Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, said before the report. “We don’t expect residential construction will contribute much to growth this year.”
more @ Bloomberg.com
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