Surprise Drop In Housing Data Checks Market's Rise

MADLEN READ

NEW YORK (AP) — A record low in housing construction has investors doubting the economy again.

Stocks closed narrowly mixed in light trading Tuesday as the surprise drop in construction and a cautious outlook from retailer Home Depot Inc. led energy and utility stocks to pare gains.

Construction of homes and apartments fell 12.8 percent last month to the lowest pace on records going back a half-century, the Commerce Department said. Analysts had expected housing starts to rise.

The report did contain some positive signs, including a rebound in single-family construction that partly offset a drop in apartment construction. And a sharp pullback in construction is necessary to rid the housing market of excess inventory, many analysts pointed out.

Wall Street has been trying to get a read on the housing market for months as investors look for solid signs the economy is recovering. Stocks surged more than 3 percent on May 4 following unexpected increases in pending home sales and construction spending. But a big inventory of unsold homes and record foreclosures are swallowing much of the demand, making it hard for prices to stabilize.