By Elizabeth Martinez
Miami, FL-New home sales made up about 7 percent of the housing market last year. That's down from about 15 percent before the mortgage crisis. The number of new homes up for sale in June fell 1.4 percent from a month earlier to 210,000, the lowest level in nearly 42 years. However, the Commerce Department’s July reports show a slight increase of 1.7 percent in home constructions. This does not necessarily mean that things are starting to take a positive turn, applications for building permits hit lowest point in 14 months, and they went down 3.1 percent. Furthermore, indications of future building were weak, the government said Tuesday.

The Housing construction industry got a boost earlier in the year when the government offered buyers up to $8,000 in federal tax credits. But after the incentives expired at the end of April, things in the construction industry started going downhill.

The slight increase in July seems to be driven by reported 32.6 percent surge in construction of apartments and condominiums, which jumped to an annual rate of 114,000 units. On the other hand, the bigger single-family sector declined 4.2 percent, falling to an annual rate of 432,000 units. Furthermore, the drop in application for building permits for new construction reflected a seasonally adjusted annual rate of 565,000, the slowest pace since May 2009.

Construction activity surged 30.5 percent in the Northeast and was up 10.7 percent in the Midwest. However, construction fell 6.3 percent in the South and was flat in the West.
"Activity in the housing market is likely to remain depressed for several years," Paul Ashworth, U.S. economist at Capital Economics, said in a research note. "Housing is not going to lead the economic recovery."

"The 'good' news, however, is that housing is so depressed it is hard to see activity falling much further from such a severely depressed level." Ashworth said.