New home construction surges 41%

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- New home construction skyrocketed 40.9% in April compared to last year, according to a government report released Tuesday.

Housing starts increased to a seasonally-adjusted annual rate of 672,000 last month, the Commerce Department said. That was a 5.8% rise over March 2010.

Economists were expecting housing starts to jump to 655,000.

New construction of single-family homes, the key sector of the housing market, rose 10.2% over the month to an annual rate of 593,000.

New construction of multi-family homes -- buildings with 5 or more units -- was 68,000.

April was the last month in which sales to first-time home buyers could qualify for a federal tax credit of up to $8,000. Earlier this year lawmakers extended the deadline through April 30 and added a new credit of up to $6,500 for some existing home owners who move.

"The increase in demand prompted by the tax credit has lifted construction," wrote Ian Shepherdson, economist at High Frequency Economics, in a research note.

"But the expiration of the credit ... has made homebuilders wary about continuing to add new homes during the summer," he said.

Building permits: That's probably why applications for building permits, a gauge of future construction activity, sank in April. Permits fell to a seasonally adjusted annual rate of 606,000 last month, down 11.5% from a revised 685,000 in March.

Economists were expecting 680,000 permits. But despite this month's sharp drop, permits were still up 15.9% from April 2009.

"In the near-term the drop in permits clearly signals falling starts ahead," Shepherdson wrote. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,135.72 38.82 0.21%
Nasdaq 4,982.81 15.67 0.32%
S&P 500 2,101.04 2.51 0.12%
Treasuries 2.11 -0.01 -0.52%
Data as of 5:46pm ET
Company Price Change % Change
Bank of America Corp... 16.00 0.16 1.01%
Apple Inc 126.41 -2.13 -1.66%
AbbVie Inc 56.86 -3.41 -5.66%
General Electric Co 25.82 0.16 0.62%
Avon Products Inc 9.05 -0.05 -0.55%
Data as of 4:02pm ET
Sponsors

Sections

The company Allstar allegedly lured customers in with misleading TV commercials and then overcharged them. More

Wage growth has become the central focus of the economy's health. It will impact workers and investors. More

Nanostate's Flash Flood is a coating designed to save your smartphone from accidental water exposure. Our test was a little more extreme. More

Frank & Oak, Airbnb, and Net-a-Porter are just a couple of companies investing in the antiquated medium. More

Lawmakers and consumer advocates are speaking out against the special treatment given to debt collectors hired by government agencies across the country. More