July 14, 2024

Housing Starts Increase, While Jobless Claims Slip

WASHINGTON (Reuters) — Housing starts in the United States rose more than expected and permits for future construction touched a five-month high in May, a government report showed on Thursday, but any recovery will be hampered by a glut of pre-owned homes, economists warned.

The Commerce Department said housing starts rose 3.5 percent to a seasonally adjusted annual rate of 560,000 units, retracing almost half of April’s steep decline. April’s starts were revised up to a 541,000 unit pace, which was previously reported as a 523,000 unit rate.

Compared to May last year, residential construction was down 3.4 percent.

An oversupply of previously owned houses, especially foreclosed properties which sell well below their value, is dampening new home construction. A survey on Wednesday showed sentiment among home builders at its lowest in nine months in June.

Last month, there was an increase in groundbreaking for both multi- and single-family homes. Starts in Western states were the highest since August.

Multifamily home starts rose 2.9 percent. The increase in the construction of multifamily units reflects a growing demand for rentals as relentless declines in house prices encourage Americans to delay home purchases and even give up properties whose mortgages are far higher than their values.

Single-family home construction, which accounts for a large portion of the market, rose 3.7 percent.

The government also reported Thursday that new applications for jobless benefits dipped in the latest week but remained at levels too high to put a dent in the unemployment rate.

The Labor Department said new jobless claims fell to 414,000 last week from an upwardly revised 430,000 in the prior week.

Claims have been above 400,000 for two months, reflecting a rough patch in the recovery that has led to renewed weakness in an already anemic job market.

Continuing claims eased to 3.68 million from 3.70 million in the week ended June 4, the most recent data available, while the total number of recipients on benefits rolls, including those receiving emergency benefits under a Congressional extension, remained at 7.4 million in the week ended May 28, down about 200,000 from a week earlier.

The economy produced just 54,000 new jobs in May and the unemployment rate rose to 9.1 percent from 9.0 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=cefacc7707e7e498d9b3283e600f6618

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