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Housing starts plummet
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May 18, 1999: 9:14 a.m. ET
April starts plunge 10.1 percent, the biggest drop in almost 5-1/2 years
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NEW YORK (CNNfn) - New home construction across the U.S. plummeted 10.1 percent in April from March - the biggest monthly decline in almost 5-1/2 years - as demand for new homes waned after near-record activity through the winter months, the Commerce Department reported Tuesday.
Total starts fell to a seasonally adjusted annual rate of 1.574 million units in April after a revised decline of 0.01 percent in March and a fall of 3.7 percent in February, Commerce Department figures showed. That was the biggest monthly drop since a 17 percent plunge in January 1994, and the lowest number of new starts since an annual rate of 1.541 million units in May of last year.
The decline surprised Wall Street analysts, who had anticipated a 2.6-percent decline to a 1.720-million rate for the month, according to those surveyed by Standard & Poor's market research arm, MMS.
The drop in construction offers some hope to market watchers that the soaring U.S. economy may be starting to slow on its own accord. Members of the Federal Reserve's Open Market Committee meet Tuesday to decide whether or not the economy needs a yank on the reigns in the form of higher interest rates. The current target for overnight loans between banks rests at 4.75 percent, where its been since November.
This home-to-be in New Jersey was the exception in April, as new construction fell sharply last month.
While the number offers some hope that the U.S. economy is slowing down, "there's not a lot of reason to see housing starts slow appreciably," said MMS Toronto's Rob Palombi. "Given the fundamentals are still supportive - strong job growth, low interest rates - we should see a rebound soon."
Near-record housing starts during the winter months also contributed to a slowdown in the first quarter as activity retreated to more normal levels, Palombi said.
The decline, however, was not seen across the entire country, with the markets in the West showing some growth. April starts in the West rose 2 percent to an annualized rate of 406,000 compared with 398,000 in March.
In the Midwest, starts fell 14.6 percent and in the South they declined 14.5 percent. Starts in the Northeast portion of the country dipped a more moderate 6.8 percent.
In another signal the housing market may be slowing, new applications for building permits fell for the third straight month, dropping 5.1 percent in April to an annual rate of 1.569 million - the largest drop in permit applications since September of last year. 
-- by staff writer M. Corey Goldman
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