US home construction collapsed 22.3% in March

Business

In this March 18 ,2020 photo, construction continues at a housing plan in Zelienople, Pa. Spending on U.S. construction projects fell 1.3% in February with housing and nonresidential construction both showing weakness even before the coronavirus struck with force in the United States. The Commerce Department said the February decline followed a 2.8% rise in construction in January. (AP Photo/Keith Srakocic)

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The Associated Press (AP) — U.S. home-building activity collapsed in March as the coronavirus spread, with housing starts tumbling 22.3% from a month ago.

The Commerce Department said Thursday that ground breakings occurred last month at a seasonally adjusted annual rate of 1.2 million units, down from a 1.56 million pace in February. Construction of single-family houses fell 17.5%, while apartment and condo starts were off 32.1% from a month ago.

All of this paints a bleak outlook for housing as the lockdown to contain COVID-19 have led more than 20 million Americans to lose their jobs in the past four weeks.

There was a 6.1% decline in the completion of homes being constructed, which means many homes are being left half built. The drop was 15% of single-family houses, meaning that unless economic activity picks up soon there could be ghost towns half-built housing developments, an phenomenon last seen in the aftermath of the 2008 financial crisis.

Construction activity will likely continue to slow. There was also a 6.8% drop in permits to begin construction in March.

Homebuilders have become fearful. A confidence index released Wednesday by The National Association of Home Builders and Wells Fargo plunged 42 points in April to a reading of 30, the largest single monthly change in the history of the index. Any reading below 50 signals a decline.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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