WASHINGTON - Home construction plunged last month to the lowest level since October as the economy remained weak and demand for housing plummeted.
Driving the June decline was a more than 20 percent drop in condominium and apartment construction, a small but volatile portion of the market. Construction of single-family homes, the largest part of the market, was down slightly, by 0.7 percent.
Overall, construction of new homes and apartments in June fell 5 percent from a month earlier to a seasonally adjusted annual rate of 549,000, the Commerce Department said yesterday. May's figure was revised downward to 578,000.
Home builders are struggling to compete with a glut of homes on the market, many of them foreclosures or deeply discounted properties.
One bright area of the new home construction report was a 2.1 percent increase in building permit applications, a sign of future activity. They rose to an annual rate of 586,000, also driven by apartment construction.
A slumping job market and competition from foreclosed properties have forced builders to limit construction, especially after federal tax credits that spurred sales expired April 30. New home sales in May plunged 33 percent.
"The housing market remains the Achilles heel of the recovery," said M. Cary Leahey, a senior economist at Decision Economics. "It is hard to imagine confidence recovering to healthy levels until the housing market experiences much less distress." - AP