WASHINGTON (AP) — Builders probably began work in May on the same number of projects as they did in April, leaving the construction industry at levels far below what's considered healthy.
Economists surveyed by FactSet expect construction spending was unchanged in May.
In April, construction spending rose 0.4 percent from the previous month to a seasonally adjusted annual rate of $765 billion. That was just 0.5 percent above an 11-year low hit in February and roughly half the $1.5 trillion pace considered healthy by most economists.
Analysts say it could be another four years before construction returns to healthier levels.
The Commerce Department will release the construction spending report at 10 a.m. Eastern on Friday.
Homeowners are renovating their houses rather than moving. Single-family and apartment construction is down. Builders are struggling to compete with a wave of foreclosures that are forcing down prices of previously occupied homes.
Older, re-sold homes are a comparative bargain and in great supply.
The median price for a previously occupied home in May was $166,500. New homes are about $56,100 higher, or nearly 31 percent. The gap is largely due to the flood of foreclosures and short sales, when lenders accept less than what's owed on mortgages.
Even though home prices rose in 13 of the 20 cities tracked by the Standard & Poor's/Case-Shiller price index in April, homes in six areas reached their lowest levels in nearly four years. They included hard-hit swaths of the West, including Las Vegas, and Florida as well as struggling cities in the Northeast, Midwest and South, such as Charlotte, Chicago and Detroit.
There's a fear the rise in home prices could be short-lived, too.
Nearly 2 million foreclosures could hit the market over the next two years. Many have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out.
It means foreclosures will occur later and will do damage when they hit. Homes in foreclosure sell at a 20 percent discount, on average, which can hurt prices throughout neighborhoods.
Sales of new homes have fallen 18 percent in the two years since the recession ended. Last year was the worst for new-home sales on records dating back half a century.
Aside from stiffer competition, would-be buyers are hamstrung by larger required down payments, tougher lending standards and high unemployment. Many people who could afford to buy are holding off, worried that prices have yet to hit bottom.
Commercial construction projects, of things like offices, hotels and shopping centers, has held steady in recent months while state, local and federal government construction projects have fallen consistently.
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