Applications for new building permits dropped 3.3 percent to an annual rate of 494,000, also a record low.
"I think we have probably reached the low point for this housing crash, but I don't expect us to come roaring back," said Mark Zandi, chief economist at Moody's Economy.com. "I think it will take another year for a recovery in housing to get going."
All of last month's weakness came in the volatile multifamily part of construction. By contrast, single-family construction and permits both rose, which economists took as a hopeful sign that this bigger sector of home construction was stabilizing.
That would be crucial for the broader economy. The recession - the longest since the Great Depression - was triggered by a collapse in the housing market that led to soaring loan losses and a grave crisis for the banking system. A healthy home market is needed to feed an economic recovery.
Many economists say home construction likely will stop falling in the current quarter. But any rebound isn't expected to take hold until next spring, and even then is likely to be slow. The reasons are the huge overhang of unsold homes, a wave of mortgage foreclosures and persistent job losses.
With foreclosures and other distressed properties for sale at deep discounts, builders often can't compete. Rather than launching new developments, they are waiting for signs of a broader recovery.
"They're being really cautious," said Michelle Meyer, an economist with Barclays Capital. "It will likely be a pretty gradual recovery in construction."
Zandi said he thinks home prices will keep falling until next spring and that sales won't start to show significant gains until the summer of 2010. And Wachovia economist Adam York said prices are likely to fall 10 percent more by mid-2010. Until then, the oversupply of homes is likely to remain a drag on the housing market.
The median price of a new home sold in March was $201,400 - down 23 percent from a peak of $262,600 two years earlier. The median price is the midpoint, which means half the homes sold for more and half for less.
The supply of unsold existing homes at the end of March fell 1.6 percent from a month earlier to 3.7 million, according to the National Association of Realtors, but still remained at elevated levels. With sales sluggish, it would take nearly 10 months to rid the market of those properties, compared with about 6.5 months in 2006, according to the Realtors data.
The government report Tuesday showed construction of single-family homes rose 2.8 percent in April to an annual rate of 368,000. That followed a 0.3 percent gain in March and no change in February.
Building permits for single-family homes rose 3.6 percent to a rate of 373,000 last month.
Multifamily construction plunged 46.1 percent to an annual rate of 90,000 units after a 23 percent fall in March. Permits for multifamily construction dropped 19.9 percent to 121,000 units.
Analysts said apartment construction is being hurt by a glut of condominiums on the market and by tightening credit conditions for commercial real estate.
While housing construction and home sales appear to be at or near a bottom, two big unknowns are the sagging job market and the effectiveness of President Barack Obama's plan to help up to 9 million borrowers obtain more affordable mortgages.
In April, housing construction fell 30.6 percent in the Northeast, the largest drop for any region. Housing starts dropped 21.4 percent in the Midwest and 21.1 percent in the South. The West was the only region showing strength, with a 42.5 percent jump in housing starts.
The National Association of Homebuilders said this week that its survey of builder confidence rose for the second straight month in May, reflecting growing optimism.
The Washington-based trade group's index rose two points to 16, the highest reading since September. Even with the rebound, the index remains near historic lows. Readings lower than 50 indicate negative sentiment about the market.
The housing slump has hurt related industries such as home remodeling. But two national chains reported better-than-expected earnings this week.
Home Depot Inc. said its first-quarter profit climbed 44 percent on fewer charges, and the nation's largest home improvement retailer beat Wall Street's expectations despite lower sales. And its smaller rival Lowe's Cos. reported a quarterly profit that also beat analysts' expectations, and the company boosted its full-year outlook.
But the nation's top three homebuilders reported results earlier this month that give little hope the spring selling season will be strong enough to stop the red ink.
Pulte Homes Inc. and Centex Corp., which agreed to combine this year to become the largest U.S. homebuilder, said that while their quarterly losses narrowed, they are still battered by falling prices and a glut of unsold homes.
D.R. Horton Inc., the industry's No. 1 home builder, also reported that its losses had shrunk. But the company said it still faces challenges from foreclosures, high inventory levels, tight homebuyer credit, low consumer confidence and job losses.
"The good news is that the bottom for house construction is in sight ... in this very long and painful construction cycle," said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh.
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