Housing starts in the U.S. increased more than forecast in May, led by a jump in the West as other parts of the country languished.
Work began on 560,000 houses at an annual pace, up 3.5 percent from the prior month and exceeding the 545,000 median forecast of economists surveyed by Bloomberg News, figures from the Commerce Department showed today in Washington. Building permits, a sign of future construction, also increased.
Falling real estate values and the threat that foreclosures will push prices even lower mean the construction industry will continue to lag behind other parts of the economy. Joblessness exceeding 9 percent indicates that a rebound in housing will take years to develop.
“Builders just aren’t making profits and so they aren’t putting out homes,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “There’s just general uncertainty about the economy and housing prices, and that’s what’s keeping housing from improving.”
Another Commerce Department report today showed the current-account deficit in the U.S. increased less than forecast in the first quarter as the country’s income surplus climbed to a record. The gap, the broadest measure of international trade because it includes income payments and government transfers, widened to $119.3 billion from a $112.2 billion shortfall in the fourth quarter.
Fewer Americans than forecast filed applications for unemployment benefits last week, indicating the pickup in firings that began in April is abating, figures from the Labor Department also showed. Jobless claims declined by 16,000 to 414,000 in the week ended June 11. Economists surveyed by Bloomberg projected 420,000 filings, according to the median forecast.
Stock-index futures trimmed earlier losses after the reports. The contract on the Standard & Poor’s 500 Index maturing in September fell 0.2 percent to 1,257.7 at 8:46 a.m. in New York after being down as much as 0.5 percent. Treasury securities rose, sending the yield on the benchmark 10-year note down to 2.91 percent from 2.97 percent late yesterday.
Housing starts estimates ranged from 493,000 to 585,000 in the Bloomberg survey of 78 economists.
The Commerce Department revised April’s total to a 541,000 pace, up from a previously estimated 523,000.
Building permits climbed 8.7 percent to a 612,000 annual pace in May, the most this year. The increase was led by a 23 percent jump in applications for work on multifamily units. They were projected to drop 1.1 percent to a 557,000 level, according to the survey median.
Construction of single-family houses increased 3.7 percent to a 419,000 rate in May from the prior month. Work on multifamily homes, such as townhouses and apartments, rose 2.9 percent to an annual rate of 141,000.
Starts climbed in two of the four regions, led by an 18 percent jump in the West that took construction in that area to the highest level since August.
Work began on 1.5 percent more houses in the South, failing to make up for the 21 percent plunge the prior month when flooding and tornadoes closed work sites. Starts dropped 4.1 percent in the Midwest and 3.3 percent in the Northeast.
Confidence among U.S. homebuilders plunged in June, led by a decline in the outlook for sales. The National Association of Home Builders/Wells Fargo sentiment index declined to 13 this month from 16 in May, data from the Washington-based group showed yesterday. A measure of sales expectations for the next six months matched the lowest level on record.
Firms like Hovnanian Enterprises Inc. are still struggling to turn a profit in the U.S. housing market. The largest homebuilder in New Jersey reported a net loss for the three months ended April 30 that was wider than analysts estimated.
Sales of existing homes, which make up more than 90 percent of the market, fell 4 percent to a 4.85 million annual pace in May, economists surveyed by Bloomberg forecast the National Association of Realtors may report on June 21. Existing home sales have been gaining market share from new homes due to growing demand for lower-priced distressed homes.