Housing Starts Fall 32.1% in May

The dropoff marks the 13th straight month of declines.
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Single-family housing starts fell for the 13th straight month in May, a sign that residential construction remains a significant drag on the U.S. economy.

Overall housing starts -- including multifamily units -- totaled a seasonally adjusted annualized rate of 975,000, which was down 3.3% from April and down 32.1% from a year ago, the Census Bureau said Tuesday.

New permits, an indicator of future demand, totaled an annualized rate of 969,000, which was down 36.3% from last year.

Both numbers were essentially in-line with economists' expectations.

Wachovia economic analyst Adam York says new construction activity will continue to decline into the summer, and he expects a weak to nonexistent recovery after that.

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The weakness in the housing starts remains a Catch-22 for homebuilders. "In some ways, you need the declines to help the supply-demand imbalance you have in the marketplace. But obviously the declines hurt builders and the economy that that supports," York says.

In premarket trading Tuesday,

Lennar

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,

KB Home

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,

Pulte Homes

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and other homebuilders were trading flat.