Rise in House Construction, Bank Foreclosed Home
May 25th, 2009 by 
Joseph Smith
The real estate industry experts were given a ray of hope that the housing market may be bottoming when April 2009 market data showed a slight increase in the construction activity at single-family homes despite a jump also in the number of bank foreclosed home.
However, with the continuous rise in the number of unsold properties, the unabated spread of foreclosure and the falling home prices, experts do not expect an immediate housing market recovery.
According to the U.S. Department of Commerce, construction of apartments and new homes declined 12.8 percent in April to an annual seasonally adjusted rate of 458.000 units. The numbers were the lowest in the construction activity record. Furthermore, new building permit applications also declined 3.3 percent to year-over-year rate of 494,000, still the lowest data on the record.
The biggest decline in building permit applications and construction activity last month was seen in the multifamily sector. On the other hand, single-family permit applications and construction both increased, indicating that this sector of the house construction is starting to get back on its feet and on its way to stability.
Despite the continuous increase in foreclosures in the country, single-family house construction performed a 2.8 percent jump, reflecting a yearly rate of 368,000 construction. In March, construction activity at the single-family home level showed a gain of 0.3 percent, but figures remained unchanged in February.
BMO Capita Markets economist Benjamin Reitzes said that the overall housing construction in the United States remains very weak. However, he pointed out that the show of stability in single-family home permit applications and construction is encouraging.
Meanwhile, multifamily home construction declined 46.1 percent to 90,000 units annually, with a 23 percent drop in March. Permit applications for multifamily construction also dropped by as much as 19.9 percent to 121,000 houses.
According to analysts, the apartment construction activity was severely affected by the flood of condominiums on the market and by strict credit conditions for the commercial real estate.
Analysts noted that the recovery for single-family home construction will be far from coming as massive unemployment and the unabated foreclosures continue to wreak havoc on this sector.
Paul Dales of Capital Economics said that low-priced bank foreclosed home and the excess new homes supply on the market have made new home construction less appealing.
