WASHINGTON (AP) — Builders broke ground on more new homes last month, giving the weak housing market a slight boost at the start of the spring buying season.
Home construction rose 7.2% in March from February to a seasonally adjusted 549,000 units, the Commerce Department said Tuesday. Building permits, an indicator of future construction, rose 11.2% after hitting a five-decade low in February.
Still, the building pace is far below the 1.2 million units a year that economists consider healthy. And March's improvement came after construction fell in February to its second-lowest level on records dating back more than a half-century.
Millions of foreclosures have forced home prices down. In some cities, prices are half of what they were before the housing market collapsed in 2006 and 2007. And more foreclosures are expected this year. Tight credit has made mortgage loans tough to get. Many would-be buyers who could qualify for loans are reluctant to shop, fearing that prices will fall even further.
A sign of the battered industry is the number of new homes finished and ready to sell dropped in March to a seasonally adjusted 509,000 units, the lowest level on records dating back to 1968. And the number of homes now under construction has fallen to a four-decade low.
"Housing starts remain at an extraordinarily depressed level," said Dan Greenhaus, chief economic strategist at Miller Tabak + Co. "To put this in further perspective, a doubling of (new homes) from here would still put starts at the lowest level of any other recession."