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Single-Family Building Plummets In June

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The Associated Press

Published: July 18, 2008

WASHINGTON - A beat-the-deadline rush to file permits for apartment construction in New York City lifted housing starts to unexpectedly high levels in June, but it was no cause for rejoicing. Construction of single-family homes nationwide fell to the slowest pace in 17 years.

Builders started work on single-family homes at an annual rate of 647,000 units last month, a drop of 5.3 percent from the previous month, the Commerce Department reported Thursday. It marked the slowest pace for single-family activity since January 1991, another period when housing was going through a severe downturn.

That decline in single-family construction was in contrast with a 42.5 percent surge in apartment building, an increase attributed to a change in New York City building codes that triggered a rush by builders to take out applications before new regulations took effect July 1.

In the way the government presents the housing statistics, a big increase in one area can greatly influence the overall figure because the change for one month is multiplied by 12 to get an annual figure.

With the surge in apartments in New York, total construction rose by 9.1 percent to a seasonally adjusted annual rate of 1.066 million units, still 26.8 percent lower than a year ago. Economists said they expect that figure to resume a downward slide in coming months given all the problems facing housing at the moment.

The housing industry, which has been in a slump for more than two years, is struggling to cope with record levels of unsold new and existing homes. That glut is being expanded by swelling levels of foreclosures, which are dumping even more houses on the market.

Buyers are reluctant to purchase a home with home prices still falling sharply, and even buyers who are ready to commit are having trouble qualifying for a loan as lenders tighten standards in response to soaring mortgage delinquencies.

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