US housing starts fall 10.8% in March

US housing starts fall 10.8% in March
By Alan Rappeport in New York
Copyright The Financial Times Limited 2009
Published: April 16 2009 15:43 | Last updated: April 16 2009 15:43
http://www.ft.com/cms/s/0/faa22722-2a91-11de-8415-00144feabdc0.html


New US residential building slowed sharply in March after a surprise surge the month before, dimming hopes that the real estate slump may be nearing a bottom.

Housing starts fell for the eight time in nine months, dropping by 10.8 per cent to an adjusted annual rate of construction of 510,000, commerce department figures showed on Thursday. The decline was worse than analysts expected and was due to a big drop in construction of multi-family homes. Single-family starts were unchanged in the month.

“Instead of springing forward in March, builders fell back,” said Richard Moody, chief economist at Forward Capital.

On the year housing starts are down by 48.4 per cent, as builders became wary of breaking new ground amid plunging real estate prices. Last month’s decline followed a jump in new construction in February, when housing starts rose by a revised 17.2 per cent. Construction remained above January’s low of 488,000, the worst month since 1959.

According to economists at Capital Economics, housing starts are 77 per cent below their peak and 60 per cent lower than their 50-year average. During the height of the home construction boom monthly housing starts peaked at 2.27m in January 2006

“Even if housing activity has passed its nadir, it is still very, very weak,” Paul Dales, US economist at Capital Economics said.

Building permits, which signal future construction, fell by 9 per cent in March and have declined by 45 per cent year-on-year.

In spite of those results a separate survey on Wednesday from the National Association of Homebuilders showed sentiment among housebuilders had risen this month by the most in five years as cheap prices and low mortgage rates lured new buyers who can get financing.

The disappointing construction figures come as home foreclosures spiked due to expiring moratoriums. RealtyTrac said on Thursday that foreclosure activity was up by 24 per cent in the first quarter compared to last year and up by 46 per cent year-on-year in March.

Separately on Thursday the labour department said that new US jobless claims eased last week, although the number of workers continuing to claim unemployment through the first week of April rose to a fresh record high as companies continue to shed workers.

Initial claims fell by 53,000 to 610,000, beating economists’ predictions of an increase. Those making continuing claims rose to 6.02m, the highest total since tracking began in 1967.

Earlier this month the labour department said that US unemployment soared to 8.5 per cent last month, its highest level since 1983. Some economists forecast that to reach 8.9 per cent in April.