Real Estate: The Home Front
The pace of U.S. home construction rose 0.8% in March though the level of activity remained sharply below the year-ago level, a government report showed.
The Commerce Department said housing starts set an annual pace of 1.518 million units in March compared with a 1.506 million unit pace in February. Economists had forecast March housing starts to drop to a 1.495 million unit pace from February's originally reported 1.525 million units.
Building permits, which signal future construction plans, also rose 0.8% to a 1.544 million unit pace. Economists were expecting building permits to register a 1.510 million unit pace, down from the 1.532 million in February. Permits are off 25.9% from the March 2006 pace of 2.085 million units.
Meanwhile, housing completions fell 25.9% in March versus a year ago -- the biggest percentage decline since June 1982.
Woes in the subprime mortgage market pushed a measure of U.S. home builder confidence to a four-month low in April, the National Association of Home Builders said on Monday.
The NAHB/Wells Fargo Housing Market Index dropped to 33 in April from 36 in March, its second consecutive monthly fall and its lowest since December when it also came in at 33. The index fell to a 15-year low of 30 last September.
"The tightening of mortgage lending standards in connection with the subprime crisis has shaken the confidence of both consumers and builders, as reflected in this report," said NAHB Chief Economist David Seiders.
The unfolding effects of this crisis has compelled NAHB to trim its forecasts of home sales and housing production for both 2007 and 2008, Seiders said in a release. The group sees new-home sales at an annualized rate of 1.44 million units in 2007, down from the 1.65 million unit pace projected earlier this year.
"While we still expect to see some improvements in housing market activity beginning later this year, the downside risks and uncertainties surrounding that forecast are considerable," he said
States are stepping up to the plate to combat foreclosures and the subprime mortgage mess, and Diana Olick, CNBC real estate reporter, has the details.