Home construction has struggled to gain traction
By Josh Boak
AP Economics Writer
WASHINGTON (AP) — The pace of U.S home construction slipped in May with many Americans still struggling to afford new houses.
Builders started work at a seasonally adjusted annual rate on 1.01 million homes last month, the Commerce Department said Tuesday. That was down 6.5 percent from 1.07 million in April.
Construction firms began work on fewer single-family houses, condominiums and apartments last month.
Home construction has struggled to gain much traction this year, limiting its ability to contribute as much to broader economic growth as it has in the past. Many would-be buyers face higher mortgage rates than at this time last year, while builders are selling fewer new homes but charging more for them. That has reduced the number of possible buyers and the number of construction jobs. Builders employ 1.49 million fewer workers than they did at the start of the Great Recession in December 2007, a loss of roughly 20 percent.
“We expect housing to contribute positively to 2014 economic growth, but the magnitude of its contribution likely will be much smaller than that reported for the past two years,” said Dana Saporta, director of U.S. economics at the bank Credit Suisse.
In May, construction tailed off in the Northeast, Midwest and West. Only the South experienced greater building activity in May.
Housing starts have risen 9.4 percent over the past 12 months. But apartments account for most of the gains, suggesting that more Americans will be renting instead of owning homes.
