ZCZC
BCN-27
US-ECONOMY-HOUSING-BUILDING
US home construction slides further in June
WASHINGTON, July 17, 2019 (BSS/AFP) – Construction of new homes in the United
States fell for the second straight month in June as builders erected fewer
apartments in the West and South, according to data released Wednesday.
And the pace looked set to slow even further as permits for new
construction of much needed homes took an unexpected tumble to the lowest in
just over two years, also led by steep drops in the West and South.
The housing sector is a key segment of the US economy, helping drive
consumer spending and serving as one barometer of economic wellbeing.
But while construction was marginally stronger in the second quarter than
at the start of the year, it is not keeping pace with demand.
The Commerce Department reported that home construction fell 0.9 percent in
June compared to May, dropping to an annual rate of 1.25 million, seasonally
adjusted. That fell short of economists’ expectations and was more than six
percent below June of last year..
Permits for new construction projects fell six percent, to the lowest level
since May 2017, and 6.6 percent below the year-ago level.
The weakness for permits was all in the volatile apartments segment,
however, which plunged nearly 21 percent in the months and is 13 percent
below June 2018.
Officials warn the monthly data are subject to broad margins of error and
say six months should elapse before a trend can be established.
Despite low unemployment, rising wages and falling mortgage rates,
sentiment among homebuilders in the United States has been tame in recent
months. Analysts blame labor shortages and rising costs for materials.
Economists said the housing market was likely to pickup in later in the
year to meet pent-up demand.
Amid rising mortgage applications, “we expect home sales to reach new highs
in the late summer or early fall, dragging up housing construction in due
course,” Ian Shepherdson of Pantheon Macroeconomics said in a research note.
BSS/AFP/SR/1945 HRS