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Housing Construction Fell Again in March
In twin signals that the housing market continues to stumble lower, construction of new homes fell sharply last month, and foreclosures surged in the first quarter, according to reports released on Thursday.
The government reported that new home starts fell 10.8 percent in March from February, just a month after a sharp spike in new-home construction warmed hopes among some economists and investors that the country’s foundering housing market was beginning to make a comeback as credit conditions eased.
Home construction in March fell to an annual pace of 510,000 units, the Commerce Department reported, less than economists’ expectations of 540,000 units. It was the second-lowest level on record, and 48.4 percent lower than housing starts a year ago.
“There’s still no clear indication that the construction market is coming back,” said Mike Larson, a housing analyst at Weiss Research. “Even if companies want to start projects, they’re having a harder time getting the money to do so. We’re being overwhelmed by distressed inventory as well as regular sellers trying to get out of their homes. There’s not a heck of a lot of incentive for builders to ramp up construction.”
The data firm RealtyTrac reported that foreclosure filings surged 9 percent, to 803,489 properties, in the first quarter of 2009. RealtyTrac said that foreclosure notices increased 17 percent in March from February.
“We saw a record level of foreclosure activity,” James J. Saccacio, chief executive of RealtyTrac, said in a statement. He added that foreclosures would probably increase over the next months as temporary halts to foreclosures expired at banks and agencies like Freddie Mac and Fannie Mae.
The flood of cheap foreclosed homes and distressed properties has helped push home prices lower across the country, especially in areas hit hardest by the housing bust, like Southern California, Phoenix and Florida. In some cities, as many as 70 or 80 percent of home sales are now foreclosures, real estate agents have said.
The lure of cheap, plentiful houses and lower mortgage rates has drawn buyers back to the market, and an industry group says homes are more affordable than ever before. Interest rates on 30-year mortgage rates fell slightly to a nationwide average 4.82 percent last week, according to data released Thursday by Freddie Mac.
The Federal Reserve and the Obama administration have deployed a barrage of assistance programs and fiscal policies to lower mortgage rates, hoping to ease borrowing and make monthly house payments more affordable for homeowners. But headwinds in the housing market, including a glut of unsold properties, are keeping builders at bay. In March, single-family housing starts were unchanged at an annual rate of 358,000.
Building permits, an indicator of future construction, fell 9 percent from February, to an annual pace of 513,000. Permits were issued at an annual rate of 932,000 in March 2008.
Despite the monthly drops in permits and new construction, some economists said they sensed that these indicators of the housing market were no longer tumbling sharply lower. The numbers have been volatile in recent months, and can bounce higher and lower depending on factors like weather.
“It does look to me like we’re hitting a bottom,” said Ian Shepherdson, chief United States economist at High Frequency Economics, about building permits. “We’re now seeing a restabilization at a much lower level. It doesn’t mean they’re about to rebound.”
The Labor Department also reported that first-time claims for unemployment insurance fell 53,000, to a seasonally adjusted 610,000 last week. The large decline caught economists by surprise, but they pointed out that weekly jobless numbers are extremely volatile, and said that they still expected unemployment to rise sharply in the months ahead.
Continuing jobless claims rose to 6 million for the week ending April 4, an increase of more than 100 percent from the same time last year. Article by Jack Healy for the New York Times. For more news and information click the link below for the www.nytimes.com.
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