Housing construction slides

July saw new US residential building slowing down as dwindling construction of multi-family homes hit, a commerce report has shown. Separately the labour department said that wholesale prices recorded their biggest annual decline on record last month which is due to plunging petrol prices.

Housing starts fell by 1 percent in July from June to an adjusted annual rate of construction of 581,000. The result trailed economists' expectations of a jump in starts, but the June figures were revised up to show a 6.5 percent monthly increase after originally showing a 3.6 percent jump.

Construction of single-family homes picked up, as building of multi-family housing slowed down. Multi-family home construction was off by 16.7 percent in July, but single-family housing starts rose for the fifth month running, climbing by 1.7 percent.

"The single permits number in particular looked relatively promising," said Alan Ruskin, strategist at RBS Greenwich Capital. "As such, the underlying picture is still consistent with a slow bottoming in this key sector."

New construction activity was weakest in the northeast, where it fell by 16.3 per cent, and strongest in the midwest, where it rose by 12.9 per cent. Starts slipped by 1.4 per cent and 1.6 per cent in the south and west, respectively.

Building permits, which show signs of future construction, also dropped unexpectedly in July, falling by 1.8 percent to a seasonally adjusted annual rate of 560,000. This represents a 39.4 percent decrease from the year before.

"Evidence continues to mount that the worst of the declines for this cycle are behind us. Still, that doesn't mean we're going to see a huge resurgence in construction," said Mike Larson, a real estate analyst with Weiss Research. "After all, buyers still have plenty of homes to choose from, and distressed and foreclosed properties will continue to flood the market well into 2010."

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