September Housing Construction Rises 0.5 Percent
The Commerce Department says construction of new homes and apartments rose 0.5 percent in September to a seasonally adjusted annual rate of 590,000 units. That was a weaker showing than the 610,000-building rate that economists had been forecasting.
New applications for building permits, considered a good sign of future activity, fell by 1.2 percent in September, the biggest decline since a 2.5 percent drop last April.
That underscored worries that the fledgling housing revival could be derailed by continued soaring unemployment and the expiration on Nov. 30 of the government's $8,000 tax credit for first time home buyers.
Housing has been struggling to mount a recovery this year following a steep collapse that helped pull the overall economy into the worst recession since the 1930s.
But the industry still faces severe headwinds in the form of high unemployment, tighter bank lending standards and worries that home sales could falter once the government removes the first-time home buyers tax credit expires. The housing industry is lobbying Congress to extend the program.
The 0.5 percent rise in overall construction in September followed a 1 percent drop in August that was revised down from an initial estimate that housing construction had risen by 1.5 percent.
Construction of single-family homes rose by 3.9 percent to an annual rate of 501,000 units, reversing a 4.7 percent drop in August. Multifamily construction, a much smaller and more volatile segment, posted a 15.2 percent drop following a 20.7 percent rise in August.
By region of the country, construction was up 7.1 percent in the South but all other regions showed weakness. Building activity fell 5.5 percent in the Northeast and was down 1.8 percent in the Midwest and 8.8 percent in the West.
An index from the National Association Home Builders that measures builder confidence slipped slightly in October to a reading of 18, down from 19 in September. Builders blamed the slippage on the approaching expiration of the home buyer tax credit.
The industry contends that extending and expanding the tax credit for one year would generate nearly 350,0000 jobs and $11.6 billion in additional tax revenues.