Housing starts fell to a five-month low in May but industrial output rose, evidence of an uneven recovery that has kept inflation at a minimum.
As the government's tax incentives for homebuyers expired, new home building dropped 10 percent to a seasonally adjusted annual rate of 593,000 units, the lowest level since December, the Commerce Department said on Wednesday.
Home construction plunged last month and building permits also fell, the latest signs that the construction industry won't fuel the economic recovery.
Builders are scaling back now that government incentives have expired. The biggest evidence of that trend: single-family homes tumbled 17 percent, the largest monthly drop since January 1991. The struggle in the housing industry is a concern for the broader economy because fewer homes mean fewer jobs across various sectors.
Overall new homes and apartments fell 10 percent in May to a seasonally adjusted annual rate of 593,000, the Commerce Department said Wednesday. April's figure was revised downward to 659,000. Applications for new building permits — a sign of future activity — sank 5.9 percent to an annual rate of 574,000. That was the lowest level in a year.
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