Housing starts plunged unexpectedly last month and reached a record low, the Commerce Department said Tuesday, signaling that the market continues to be hit by the mortgage mess and the backlog of unsold homes.
Permits for new construction also hit a new low, suggesting that things are not likely to turn around in the near term. Apartment construction plummeted, more than offsetting a slight rebound in single-family homes. Most economists had expected to see the numbers heading up.
Construction of new homes and apartments fell 12.8 percent in April to a seasonally adjusted annual rate of 458,000 units, the lowest pace on record going back to January 1959, the Commerce Department reported. Compared with the same period last year, housing starts tumbled 54.2 percent.
Applications for new building permits dropped 3.3 percent to an annual rate of 494,000.
Starts on single-family homes, however, rose 2.8 percent to an annual rate of 368,000, but the slight increase was more than balanced out by a steep drop in the more volatile multifamily sector. Apartment construction plunged 46.1 percent to an annual rate of 90,000 units after a 23 percent fall in March.
Some economists chose to focus on the data for single-family homes.
"I think we've hit bottom," Pat Newport, a housing economist with the forecasting firm Global Insight, told NPR.
"The market for single-family homes appears to be rebounding," he said. "And if the economy starts growing again, I think that this rebound will stick."
But prices are likely to stay low due to the large number of homes on the market and so many foreclosure sales, he said.
The Washington-based National Association of Homebuilders reported Monday that its survey of builder confidence increased for the second straight month in May, reflecting growing optimism on the part of many builders.
By region, the Northeast was hardest-hit, with housing construction down by 30.6 percent, while the West showed a strong rebound, with a 42.5 percent jump.
From NPR and wire service reports