Missing out on economic recovery

Associated Press

WASHINGTON

For homebuilders, it hardly feels like an economic recovery.

Nearly two years after the recession ended, the pace of construction is inching along at less than half the level considered healthy. Single-family home building, the bulk of the market, has dropped 11 percent in that time. And there’s no sign it will improve soon.

Builders are struggling to compete with waves of foreclosures that have forced down prices for previously occupied homes. The weakness is weighing on the economy.

Though new homes represent a small portion of overall sales, they have an outsize impact on the economy. Fewer new homes mean fewer jobs.

The Commerce Department said Tuesday that new-home construction plummeted last month to a seasonally adjusted rate of 523,000 homes a year.

A big drop in volatile apartment-building construction pulled down the monthly figures. Tornadoes and flooding also disrupted construction projects throughout the South.

If the pace doesn’t improve, this year could end up with fewer new homes than last year and only slightly more than 2009 — the two worst years on records dating back a half-century. Those two years benefited from a temporary home-buying tax credit.

Tuesday’s disappointing construction data contributed to a sell-off on Wall Street.

The Dow Jones industrial average fell by more than 150 points before recovering more than half of its losses to end the day down 68 points.

Nearly every major homebuilder stock dropped.

Higher commodity prices have increased the cost of nearly every building material, from lumber to roofing tiles to windows.