May turned out to be a period when a home construction company found itself with a lot of free time. According to the latest homebuilding statistics, residential construction activities declined by 10% during the month, leading homebuilders to say that their sector is unlikely to play any significant role in the economic recovery.
House construction and building permit applications declined in May, offsetting the strong performance of the manufacturing sector and the favorable wholesale inflation reports. The lack of construction projects also means that more people working in the industry are out of jobs. This further contributes to the high unemployment rates all around the country.
Industry analysts state that the performance of the construction industry has a huge impact on various sectors of the economy. The higher the unemployment rate, the less number of people are buying new houses or having dwellings constructed. Although mortgage rates have declined to an almost record low, the house construction industry still struggles.
Some economists have seen a slight positive to the trend. They stated that while the economy is growing, the housing industry remains in recession. However, despite the fact that the industry will not be able to contribute to the growth of the economy, it is also not going to pull it back down.
Home construction company activities for apartment and residential dwellings declined by ten percent, while building permit applications dropped by almost six percent. According to homebuilders, the decline is largely due to the expiration of the tax incentive offered by the federal government to home buyers.
Meanwhile, construction of single family dwellings dropped by 17%, making it the largest monthly decline since January 1991. Builders have stated that, with the tax incentive gone, it is unlikely that the sector will be able to sustain its first half performance. They added that the strong numbers posted by the sector during the first four months of the year were largely due to the tax credit.
Although home construction company projects are expected to remain flat for the rest of the year, industry observers believe that the national economy is still on its way to recovery and that the weak construction market will not hinder its pace.