Housing market woes continue as construction work dwindles

Housing Market Woes Continue

The housing market will unlikely recover until many years from now according to analysts, and the latest data supports the bleak outlook.

A report from the Department of Commerce on Wednesday showed that building permits plunged 8.1 percent in February to its lowest mark since 1960. Meanwhile, home construction dropped 22.5 percent to 479,000 homes during the same period, the lowest since April 2009.

For the year, some 600,000 housing units were built, still short of the 1.2 million houses needed to sustain growth in the housing market.

Condominium and apartment construction crashed 47 percent in February while construction for single-family homes decreased 11.8 percent for the month.

Weak sales despite rock-bottom prices have characterized the housing market since the real estate bubble burst. Economists foresee the market to be the same several months from now because of current conditions.

"There are really large structural problems with the housing market," Dan Greenhaus of Miller Tabak + Co., told AP. "This is not a run-up in oil prices. This is a multiyear build up in the housing market that is going to take more than several months or several quarters to get through," said Greenhaus.

A recovery in the housing market will depend largely on jobs creation and better credit access.

Home foreclosures have dragged down prices and more homeowners are expected to lose their homes this year. Mortgage loans are harder to secure because of stricter lending rules.

By area, home construction dropped the largest in the the Midwest with 48.6 percent. The South had the least falloff with 6.3 percent. The Northeast and the West decreased 37.5 percent and 28 percent respectively.

Because it is a major jobs creator and tax revenue source, the U.S. economic recovery will partly depend on the health of the housing market.

Posted by James Fried on Thursday March 17 2011, 8:04 AM EST. Ref: AP. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0