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With Slow Starts and Confidence Low, the Housing Slump Drags On

April housing starts fell 10.6% from the previous month, to a seasonally adjusted annual rate of 523,000. Starts during the month were nearly 24% below the revised April 2010 rate of 687,000, posting the greatest decline since October 2009, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development.

Both building permits and housing completions were down considerably when compared with April 2010 totals. Privately-owned housing unite authorized by building permits during the month were at a seasonally adjusted rate of 551,000, which is down 4% from the March rate and is 12.8% below 632,000, or the rate in April 2010.

The rate of housing completions rose 4.1% compared with the revised March estimate of 532,000, but fell more than 25% year-over-year.

Also released this week was the National Association of Home Builders/Wells Fargo Housing Market Index, which showed similarly down results in builder confidence. In the market for newly built, single-family homes, the rate remained unchanged in May at a level of 16. (A level higher than 50 indicates that more builders view sales conditions as good than poor.

“Builder confidence has hardly budged over the past six months as persistent concerns regarding competition from distressed property sales, lack of production credit, inaccurate appraisals, and proposals to reduce government support of housing have continued to cloud the outlook,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “In addition, many builders in this month’s survey cited high gas prices as a further contributor to consumer anxiety and reluctance to go forward with a home purchase.”

The NAHB/Wells Fargo index measuring current sales conditions and the index compiling prospective buyer traffic each gained one point in May, to 16 and 14, respectively. The traffic gauge, despite such a small gain, is now at its highest point since May of 2010.

View housing data from the Census and HUD.

View more on the NAHB/Wells Fargo housing index for May.

Written by Elizabeth Ecker

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