New-home construction tumbled 11 percent in March, according to government data released yesterday, dashing hopes that the troubled housing market had begun to improve.
The drop was bigger than analysts had expected and was a reversal from the surprise 20 percent jump in new-home construction in February, which had stoked hopes of a market rebound. Most of the drop came in the market for multi-family housing such as condominiums and apartment buildings with five or more units, which tumbled 42.6 percent.
Overall starts fell to an annualized rate of 510,000, the second lowest on record, according to the Commerce Department. That is 48.4 percent below March 2008.
The housing market remains weak, with the number of homes for sale far outpacing depressed levels of demand, analysts said . Builders competing against a glut of foreclosed homes on the market, which are driving down prices, also have struggled to secure construction loans and coax potential buyers into the market.
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