Home construction jumps in February
Mar 20, 2007 at 10:21 AM
WASHINGTON - Construction of new homes rebounded in February after a big decline in the previous month, but building permits slid further, indicating more problems down the road for the troubled housing industry.
The Commerce Department reported that construction of new homes and apartments rose by 9 percent in February to a seasonally adjusted annual rate of 1.525 million units.
That represented a better-than-expected rebound after construction activity had plunged by 14.3 percent in January to the slowest pace in more than nine years.
But builders' applications for new permits, considered a more reliable gauge of future activity, continued falling in February, dropping by 2.5 percent to an annual rate of 1.532 million units. That marked the 12th decline in the past 13 months in building permits and underscored the construction industry's steep slump.
The 9 percent rebound in housing in February had been expected given that construction had fallen so much in January, a month when a return to more normal winter weather had pushed construction activity lower after an unusually warm December.
After enjoying five boom years of record sales of new and existing homes, the housing industry has been mired for the past year in a steep slump as demand has fallen sharply and home prices, which had been surging, have stagnated.
The housing slump has already dragged down overall economic growth. Financial markets have been thrown into a frenzy over worries that rising mortgage defaults could threaten the financial health of lenders, especially those who had a major presence in the subprime market, which offered loans to people with weak credit histories.