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NEW YORK (Reuters) - U.S. housing starts and permits for future home construction fell in April as an overhang of homes on the market discourages builders from taking on new projects, pointing to prolonged weakness in the housing sector.
* The Commerce Department said on Tuesday housing starts dropped 10.6 percent to a seasonally adjusted annual rate of 523,000 units. * March's starts were revised up to a 585,000-unit pace from the previously reported rate of 549,000 units. * Economists polled by Reuters had forecast housing starts rising to a 568,000-unit rate. Compared to April last year, residential construction was down 23.9 percent, the largest decline since October 2009.
DOUGLAS BORTHWICK, MANAGING DIRECTOR, FAROS TRADING, STAMFORD, CONNECTICUT
"Housing starts are a continuation of the disappointing data that clouds any U.S. recovery. Fed Chairman Bernanke has often discussed the use of QE2 in stimulating housing, however today's number shows that simply is not working. Nor, however, would raising rates help. Continued weak housing data, in hand with an anemic job market, leaves the U.S. still searching for 'green shoots'. U.S. rates will be on hold for an extended period. At a time when all other countries are raising rates, a Fed on hold will lead to further dollar weakness."
MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK
"It's awful data, and we're still struggling to find the bottom here for the housing market. It does not bode well for construction in the near term, and there's a good deal of overhang in terms of inventory. The expected growth that was supposed to take place in housing this spring hasn't yet. If anything, it should be negative for growth, negative for stocks, and positive for the dollar."
GREGORY MILLER, CHIEF ECONOMIST, SUNTRUST BANKS INC., ATLANTA
"I had thought the starts number was going to be pretty poor and that turned out to be the case. Across the South in particularly, housing has been hurt by weather all year long. We had unfortunate weather since the beginning of the year. that clearly slowed the momentum of the economy. Fortunately, there will be a catch-up activity in the short-term.
"Still I'm disappointed in housing. It could be on the verge of a second dip. The market is still overwhelmed by excessive supply in all regions. There is also the financing side of it. Mortgage rates are very low but qualifying for them is much more difficult than it was several years ago. The deck is still stacked against housing. More likely it will be 2012 before we see a steady, upward move in the housing market."
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
"The data provides further confirmation of the weakness of the housing market that is apparent in most other releases coming from the sector, and this data marks a negative start from Q2. While few were looking for housing to lead Q2 GDP, most were hoping for a positive quarter after a negative contribution from housing in Q1. This reports suggests we may fail to achieve that."