U.S. home construction up 4.3%

Industry reports modest gains as the country reopens

WASHINGTON — U.S. home construction rebounded 4.3% in May after steep declines caused by shutdowns because of the coronavirus outbreak.

The Commerce Department reported Wednesday that new homes were started at a seasonally adjusted annual rate of 974,000 last month after steep declines in April and March. Compared with last year, however, construction activity remains 23.2% below last year’s pace.

Home builders are hoping that as the nation reopens, housing will post a strong recovery, helped by superlow mortgage rates. Industry analysts caution that the fledgling rebound could be derailed if infections spike again, causing potential buyers to put off looking for a new home.

Hot spots are popping up in regions of the country where building activity is increasing, but not in the South, where housing starts slid.

Applications for building permits, a good indication of future activity, rose a sizable 14.4% in May to an annual rate of 1.22 million units.

The report showed that construction of new singlefamily homes was up 5.4% while construction of apartments with five units or more increased 16.9%.

Construction was up 69.8% in the West and 12.8% in the Northeast but housing starts fell 16% in the South, the biggest market for home construction, and were down 1.5% in the Midwest.

The National Association of Home Builders/Wells Fargo survey of builder confidence released Tuesday showed a record jump of 21 points in June to a reading of 58. Any reading above 50 indicates a positive market.

“We look for strong demand, improving home

builder confidence and an ongoing shortage of supply to support growth in housing starts over the rest of the year, but we still expect starts to be down on average across 2020 overall,” said Nancy Vanden

Houten, lead U.S. financial economist at Oxford Economics.

The pickup in home building follows one of the worst months for the industry in years, indicating a construction rebound may take time to unfold. Construction sites across the nation were impacted by covid-19, and widespread

job losses weighed on housing demand.

Other figures show the housing market is picking up steam. A weekly measure of mortgage applications for home purchases has increased for nine straight weeks and is at an 11-year high.

At the same time, extended time at home has likely spurred some buyers to consider home ownership as historically low mortgage rates lured others.

(AP/Mark Humphrey) As new homes go up, like this one in Nashville, Tenn., construction activity remains 23.2% below last year’s pace, the Commerce Department reported Wednesday.