Housing Starts And Permits Down In April Due To Overhang Of Homes

WASHINGTON - Housing starts and permits for future home construction fell in April as an overhang of homes on the market discourages builders from taking on new projects, pointing to prolonged weakness in the housing sector.

The Commerce Department said on Tuesday housing starts dropped 10.6 percent to a seasonally adjusted annual rate of 523,000 units. March's starts were revised up to a 585,000-unit pace from the previously reported rate of 549,000 units.

Economists polled by Reuters had forecast housing starts rising to a 568,000-unit rate. Compared to April last year, residential construction was down 23.9 percent, the largest decline since October 2009.

Residential construction is being crowded out by an oversupply of used homes on the market, in particular, foreclosed properties, which sell well below their value.

Home builders' sentiment was flat in May, the National Association of Home Builders said on Monday.

Though builders expected a modest improvement in sales during spring, they anticipated market conditions to weaken in the next six months.

Groundbreaking last month was depressed by a 24.1 percent tumble in volatile multi-family homes, where starts for buildings with five or more units dropped 28.3 percent. Single-family home construction fell 5.1 percent.

New building permits dropped 4.0 percent to a 551,000-unit pace last month. April's permits were revised down to a 574,000-unit pace and economists had expected overall building permits in April to remain unchanged at the previously reported 585, 000-unit pace.

Permits were held down last month by an 8.8 percent drop in the multi-family segment. Permits to build single-family homes slipped 1.8 percent.

New home completions rose 4.1 percent to 554,000 units in April.

(Reporting by Lucia Mutikani, Editing by Andrea Ricci)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[laurarios02]

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[GeorgeKolar]

11:17 PM on 05/19/2011

It's probably for the best that new housing starts continue to stay low for the time being until we can worth through the resale inventory on the market. Wherever you live there are more options than ever for those who are in the position to be able to buy a home in this market. If you can swing it, now is a fantastic time to buy at some of the lowest prices we've seen in a long time at great interest rates.

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[Realtors Are Liars]

06:01 PM on 05/28/2011

George,

Considering prices are still falling, why are you telling people is a good time to buy? Based on the fact that prices are falling, it's a horrible time to buy.... HORRIBLE.

[OhManOhMan]

12:31 PM on 05/18/2011

awwww booo hooo hooooo

We build too many homes, commercial lots too fast and too expansive all over.

Suck it up Builders. Take a wild walk and re think about your greed.

[rotorhead1871]

01:32 AM on 05/18/2011

this is great news......there should be a building moratorium for 2-3 years, then home values may recover, but when you keep building, you keep the price down.
STOP BUILDING.......for a few years...

[Realtors Are Liars]

09:45 AM on 05/18/2011

It was grossly inflated housing prices that caused this mess and it is dramatically lower housing prices that will fix it.

[Downrivers]

10:27 AM on 05/18/2011

If you think dramatically decreasing the net worth of American Homeowners is the path to recovery......you are absolutely clueless.

[Downrivers]

08:23 PM on 05/18/2011

None....That was the link I thought you'd come up with. You are a fraud buckwheat....and not even any good at it.,...The data is on the web....amateur.

[VoteThemAllOut]

03:29 PM on 05/18/2011

"­there should be a building moratorium for 2-3 years"

What will you do with the tens or hundreds of thousands whose jobs are directly tied to homebuilding? Oh yes, just put them on unemployment for the next 2 - 3 years.

Good plan - nope don't think so, try again.

[Downrivers]

04:30 PM on 05/17/2011

Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 551,000.
This is 4.0 percent (±1.1%) below the revised March rate of 574,000 and is 12.8 percent (±1.2%) below the revised April 2010 estimate
of 632,000.

The entire release is here:

http://www.census.gov/const/newresconst.pdf

[Ordinary Citizen]

04:12 PM on 05/17/2011

Duh...Who wants new when they can get foreclosed? Another hurt by the big bankers....so when do these thugs go on trial? How much time will they serve for bringing down our country? Just asking...

[bejayech]

07:37 PM on 05/17/2011

2011 thug = "one who expects the purchaser to live up to the contract in which they enter"? Just strange to me.

Sure, there were some predatory deals. But I'm surrounded by friends and neighbors who banked on getting rich by overextending themselves. They either bought homes they KNEW they couldn't afford or took massive amounts of funny-money equity out of their homes to buy stuff they didn't need. The Banks fault is that they never should have lent the money in the first place...but that doesn't make them thugs.

[MSROADKILL612]

03:41 PM on 05/17/2011

Must be an old pic. 2 houses being built.

The huge mcmansions shown illustrate well, the overconsumption of form over function pretentious housing.

The blocks look small, no sign of gardens, if aircon is used in summer, why the black roofs & minimal eaves.

Good news is they are so close, they shade each other.

Good luck w/ the upkeep, let alone the mortgage if one loses a job.

I realise there are wealth people, but would they really want that environment. I sure wouldnt. Looks like it would appeal to people who enjoy the cut & thrust of a condo committee meeting.

revised FDR mantra "a bathroom for every family member".

The bubble self feeds. As values seem to increase, undercapitalising the land seems credibly foolish.

As Ken Kearn (read him) says - we dont build a home, we build something that the market is perceived to want & will fetch a good price when the time comes.

Yes, as others have said, houses sell for below replacement cost, but others note the surplus inventory. Its supply and demand for a long while to come & its a buyers market.

If peak oil happens (& it gradually is), its gonna get worse for these stupid exburbs.

Bear in mind 2 stories means no privacy in gardens.

[liberaldribble]

03:08 PM on 05/17/2011

obama 2012

the road to ruin.

[Butquestioning]

03:37 PM on 05/17/2011

Yeah, the GOP plan to destroy America is well on its way to success. You sure don't want Obama to stop the hard work that has been put in for much of the past 30 years...

The GOP filibusters and the House fights to take away all social programs, keep job growth to a minimum, and keep defense spending at enormous levels is working so well for the Republicans - and is then blamed on Obama...

The sad thing is that there are too many people are really being hurt by this and they often actually believe that it is Obama that is the problem instead of putting the blame at the source of all this - the Regressives that want to take us back to the Hoover era...

They offer no jobs bills, want to cut spending for programs that help average working class people, provide even greater tax advantages for the wealthy and big business, and keep pushing or protecting deregulation. It's hard to buy a home when values continue to decline and jobs are still at a premium. That is our "ruin"!!!

[Ordinary Citizen]

04:14 PM on 05/17/2011

Please tell me how the GOP...the party of thugs can do any better???? What is their plan that you think is so much better....come on...tell me. The GOP is the party of destruction.,..haven't you seen enough already? Come on....tell me what is so good about them...

[Duppy]

02:40 PM on 05/17/2011

Good. Happy to hear home building is down. After all, there is a glut of homes already on the market and more building is NOT a good thing. More building only helps to drive down prices as supply outstrips demand

[Butquestioning]

03:50 PM on 05/17/2011

I agree to a point. I think we have too many existing homes that need to be sold but we would benefit from jobs that are created when new homes are constructed. Jobs bring money into the economy and that stimulates more spending and more jobs...so the good and bad of all this.

I really think the problem with home building and values is that we have such high unemployment and declining wages...seems logical to me that we still need to have some type of government stimulus that would help turn this around and help stablize our economy and home values and sales. Our economy has lost trillions of dollars as home values have continued to decline and that brings down so much with it.

[Downrivers]

04:32 PM on 05/17/2011

There will be NO recovery until construction bounces. You are happy about a symptom of a serious disease.

[mrhandyman3105]

01:42 PM on 05/17/2011

No surprise here.
CEOs move jobs and production offshore to boost profits and bonuses , ......you get employee layoffs.
No employment, ....you get no money or income.
No income,......you get mortgage defaults, no purchasing, and no tax revenue.
No purchasing, .......you get no business, and no tax revenue.
Mortgage defaults,.... you get no State Tax revenue.
Defaulting mortgages, and no business, and no tax revenue,...... you get recession and depression.
Recession, and depression,.......you get Tea Party Republicans, and ECONOMIC COLLAPSE!!

[Duppy]

02:42 PM on 05/17/2011

fix up existing homes for sale instead of building new ones.

[Ordinary Citizen]

04:15 PM on 05/17/2011

the GOP at its best. Great post!

[jtabs]

11:42 AM on 05/17/2011

What we should do is turn the foreclosures into time shares with multiple time frames of say three months, 6 months, one to two years as the the disadvantages of home ownership are beginning to outweigh the advantages as many unemployed and underemployed can't financially relocate to more promising employment opportunities (being stuck in upside down homes) and with the commission suggesting limitations (if not elimination) of home deductions income taxes, which is one of the main benefits of ownership leaving only equity build up as a benefit (somewhat dubious in todays market.)

[jwoww]

11:56 AM on 05/17/2011

those houses will become shambles. no party will take ownership responsibility for the upkeep.

foreclose on them and put them on the auction market asap. let the real estate investors buy them out and use them as rental incomes. At least there you have a responsible owner maintaining the property value and local taxes.

[jtabs]

12:01 PM on 05/17/2011

But that's what I'm advocating.

[mrhandyman3105]

02:11 PM on 05/17/2011

The only problem with that is the banks.
They are sitting on hundreds of foreclosed and empty homes and keeping them off the market in order to keep the price of houses high and their stated inventory assets on the books at the higher value. If they put those houses on the market now it would drive the average price of houses so low the banks would probably go bankrupt from having to adjust their stated assets to reflect the lower value of the homes.

[OSI MODEL]

11:09 AM on 05/17/2011

This is a good thing

[Tarpon22]

11:04 AM on 05/17/2011

According to Elizabeth Warren current Head of the Consumer Protection Agency and Ben Bernake Head of the Federal reserve.

We have betwwen 81/2 and 7 1/2 MILLION FORECLOSERS comming in the next year and a half.

They call it a Tsunami compared to what we have seen so far.

You all have seen nothing yet, it is going to get very very bad.
If the U.S. Government Defaults due to Debit cieling.

Welcome to the Greatest DEPRESSION this Country will have ever witnessed.

HELL is coming to dinner

[jwoww]

12:00 PM on 05/17/2011

excellent post. mortgage companies and banks have delayed their foreclosure processes due to the investigations but that does not mean the responsible party is still not going to foreclosed on in the end. it just delayed the inevitable which was a major fault of the Obama administration. they should have let everything take its rightful course.

the wave of residential and more importantly commercial foreclosures coming within the next year is going to make the first round look likea small blip on the radar screen.

[spoonerrothbard]

01:17 PM on 05/17/2011

Okay, two faved comments in a row. I'm effing you.

[notdarkyet]

10:30 AM on 05/17/2011

Why should we be building anything when we have empty houses, strip malls, condos and offices as far as the eye can see. Soon they will tear down these buildings for no good reason to make property prices go up and be able to construct and do it all over again.

[frank day]

10:21 AM on 05/17/2011

Homes are being priced below replacement cost.

This can't continue in the long term.

[notdarkyet]

10:28 AM on 05/17/2011

Good point.

[leorangerie]

12:11 PM on 05/17/2011

Interesting comment.