Stocks fell June 16 after home construction and building permit applications declined in May, following the end of the homebuyer’s tax credit.
The Associated Press reported the disappointing housing report and profit forecast from the FedEx Corp., raising questions about how fast the economy is recovering. The package delivery company is noted as a barometer of the economy because shipping demand spikes as business conditions improve.
According to a government report on housing, weaker demand for homes will hurt an economic turnaround. New construction of apartments and houses fell 10 percent from April. A 17 percent decline in construction of single-family homes was the largest since 1991.
Applications for building permits also fell 5.9 percent to a rate of 574,000. That figure represents the lowest level in a year. Analysts had actually predicted an increase.
Those weaker-than-expected numbers come just a month after the $8,000 homebuyer tax credit ended on April 30.
“It’s going to be a bumpy ride,” Kevin Smith, a housing market analyst in New York said.
He added that housing won’t make a strong recovery until unemployment falls and overall confidence grows.