Housing starts up, but slump continues

WASHINGTON - Construction of new homes increased by the biggest percentage in more than two years in April, a rare spot of good news amid the worst downturn in housing in more than two decades.

Analysts, however, played down the increase, noting that all the strength came from the volatile apartment sector. They said the painful housing slump is far from over as a record flood of foreclosures continues to add to the sizable stockpile of unsold homes.

The Commerce Department reported yesterday that housing construction rose 8.2 percent in April to a seasonally adjusted annual rate of 1.03 million units. While apartment construction rose 36 percent, building in the much larger single-family sector of the market fell 1.7 percent, the 12th consecutive monthly decline, pushing single-family activity down to a 16-year low.

The prolonged two-year slump in housing is occurring after a five-year boom that pushed sales and home prices up to record levels.

A second report yesterday showed consumer confidence, as measured by a University of Michigan/Reuters survey, fell to a 28-year low of 59.5 in a preliminary reading for May, down from 62.6 in April. The drop was blamed in part on rising concerns about higher gas and food prices.

Treasury Secretary Henry Paulson said yesterday he believed financial markets are "considerably calmer" now than they were in March, when the credit crisis claimed its biggest victim with the near-collapse of Bear Stearns, the nation's fifth-largest investment bank. He predicted the 130 million stimulus payments being made now to taxpayers will help overcome all the other problems holding the economy back.