US new home construction falls 10.6% in April, permits off 4%

17 May 2011 14:36  [Source: ICIS news]

WASHINGTON (ICIS)--US housing construction fell by 10.6% in April from March, the Commerce Department said on Tuesday, and permits for new residential building were down 4%, indicating that the crucial new home construction market remains depressed and shows no signs of near-term recovery.

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals, resins and derivative products such as plastic pipe, insulation, paints and coatings, adhesives, roofing materials and synthetic fibres.

The American Chemistry Council (ACC) estimates that each new home built represents some $16,000 (€11,200) worth of chemicals and derivatives used in the structure or in production of component materials.

In its monthly report, the department said that housing starts in April were at a seasonally adjusted annual rate of 523,000 units, down 10.6% from the revised March figure of 585,000.

The April decline effectively wiped out the 7.2% advance reported for new housing work in March from February.

The April pace of new home construction is nearly 24% below activity reported in the same month of 2010.

The department said that building permits issued in April were at a seasonally adjusted annual rate of 551,000, 4% lower than the revised March pace of 574,000 permits.

Building permits are issued by local governments when contractors are ready to break ground and begin construction of a residential structure, so monthly permitting data are seen as a real-time indicator of the housing sector’s near-term prospects.

Within the overall figures for new residential construction in April, work on single-family homes was down by 5.1%, and new multi-family apartment projects dropped by 28.3%.

In previous housing construction reports in late 2010 and the first part of this year, construction of multi-unit apartment buildings had been picking up. Those gains were said to reflect increased demand for rental housing among former home-owners who had lost their single-family properties to foreclosure.

But the April data indicate that even the market for apartment homes is falling off.

The downturn in new home building last month was all the more worrisome to economists because the second quarter is usually a time when US housing construction begins to pick up in advance of the peak home-shopping summer months.

The 4% drop in building permits for April suggests that May’s new home construction activity is likely to continue the fall-off reported for April’s housing starts.

US Housing Starts

 

Apr ’11

Mar ’11

Mar-Apr ’11

Apr ’10

Apr ’10 to Apr ’11

US Housing Starts

523,000*

585,000

-10.6%

687,000

-23.9%

* Seasonally adjusted & annualised

($1 = €0.70)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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