U.S. Economy: Home Construction Hits 17-Year Low

Bloomberg reports: Builders started work in June on the fewest single-family U.S. homes since 1991 and manufacturing in the Philadelphia region contracted for an eighth straight month, signaling the economic slowdown is worsening.

Construction starts fell to an annual pace of 647,000, the Commerce Department said today in Washington. A change in New York City building codes spurred total starts, which include condominiums and apartment buildings, to a four-month high.

The figures underscore the housing recession was already deepening before the financial turmoil this month at Fannie Mae and Freddie Mac threatened to further curb mortgage financing. Today's drop in the Philadelphia Federal Reserve's factory gauge showed manufacturers cut orders and employment in July as confidence in the economic outlook deteriorated.

``Hopes for a bottom'' this year in home construction ``are rapidly fading,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. The housing recession ``has been spilling over to manufacturing for months,'' contributing to ``recessionary conditions,'' he said.

Housing starts in the Northeast, which includes New York, soared 242 percent in June. The city's new construction codes tightened safety and environmental standards. Examples include requiring interconnected smoke alarms and so-called ``white roofs'' to reflect heat. Changes in the tax code covering the building of affordable housing units may have also influenced the reading.

``Anyone planning to build had a strong incentive to get started before the deadline,'' Lindsey Piegza, a market analyst at FTN Financial in New York, wrote in a note to clients.

Unemployment, stocks push down leading indicators

Associated Press

Wed Jul 16

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