Home Construction Drops; Decline Showing Real Weakness in Real Estate
The Commerce Department said Wednesday that construction of new homes and apartments fell 10 percent from a month earlier to a seasonally adjusted annual rate of 593,000. April’s figure was revised downward to 659,000.
The results were driven by a 17 percent decline in the single-family market, which had benefited earlier in the year from federal tax credits of up to $8,000. It was the largest monthly drop in single-family construction since January 1991.
Applications for new building permits, a sign of future activity, also fell. They sank 5.9 percent to an annual rate of 574,000, the lowest level in a year.
The report missed Wall Street expectations by a wide margin. Economists surveyed by Thomson Reuters had predicted that housing construction would only fall to seasonally adjusted annual rate of 650,000 and had forecast that building permit applications would increase to an annual rate of 630,000.