August 31, 2010

Housing Construction Rises in July

A weak housing market received a tiny boost from apartment construction last month. But the overall outlook remained dim as applications for building permits fell to the lowest level in 14 months.

Construction of new homes and apartments rose 1.7 percent last month, according to the Commerce Department. Driving the increase was a 32.6 percent surge in apartment and condominium construction — a small fraction of the market.

Still, requests for building permits, considered a good sign of future activity, fell 3.1 percent.

A rebound in housing is considered critical for a sustained economic recovery. But builders continue to struggle with weak demand for new homes caused by high unemployment and a glut of foreclosed homes on the market.

The July increase in housing construction pushed total activity to a seasonally adjusted annual rate of 546,000 units. Building activity in June was weaker than first reported. It fell 8.7 percent to an annual rate of 537,000 units, the slowest pace since October of last year.

Housing construction got a boost earlier in the year when the government offered buyers up to $8,000 in federal tax credits. But after the incentives expired at the end of April, sales and constructions activity slumped.

Tags: construction, housing, new homes, tax credits

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