US home construction drops 30.2% in April as virus rages
Airlines see uptick in travel demand
WASHINGTON, May 20, (AP): U.S. home building plunged in April to the lowest level in five years, taken down by the economic fallout from the coronavirus pandemic.
The Commerce Department said Tuesday that ground breakings plummeted 30.2% last month to a seasonally adjusted annual rate of 891,000. That is the lowest level since February 2015. Construction of single-family homes dropped 25.4% to an annual rate of 650,000.
No region was spared. Housing starts dropped 43.6% in the Northeast, 14.9% in the Midwest, 26% in the South and 43.4% in the West.
“The monumental decline in home construction activity in April was widely expected, but the decline is breathtaking nevertheless,” said Matthew Speakman, economist for the real estate firm Zillow. “The monthly decline in housing starts was easily the largest on record.’’
The lockdowns and travel restrictions designed to contain the pandemic have brought economic life to a near standstill. The unemployment rate is 14.7%, highest since the Great Depression.
Commerce reported a 8.1% drop in the completion of homes under construction, which means many are being left half built.
The construction slump is likely to continue. Building permits for new housing dropped 20.8% to an annual rate of 1.07 million.
Meanwhile, United Airlines said it is seeing a “moderate” pickup in travel demand and fewer cancellations, and it plans a 75% reduced schedule in July, compared with 90% cuts during May and June. The airline said in a filing that most of the increased demand has been for domestic flights and a few international routes.
■ Southwest Airlines also indicated that April might have been the bottom. Planes were only 8% full on average, and revenue tumbled 90% to 95% from a year earlier. Southwest said bookings now outnumber cancellations, and it forecasts slightly smaller revenue drops in May and June. Southwest expects planes to be about 40% full in June.
■ American Airlines is dangling its AAdvantage frequentflyer program - which it values at $18 billion to $30 billion - as possible collateral for a federal loan. Chief Financial Officer Derek Kerr said Tuesday the airline hopes to line up a secured loan from the Treasury Department by the end of June. The $4.75 billion loan would be in addition to $5.8 billion in federal cash and loans that American took to help cover payroll costs through September.
American said its planes were 15% full on average in April and 35% full so far in May.
■ Poland’s national carrier PLL LOT is extending its ban on international flights for two more weeks until June 14, but it is resuming some domestic flights on June 1.
■ Long-haul carrier Etihad Airways has started making job cuts due to the pandemic. The airline offered no figures for the number of employees let go.
Kohl’s has reopened about half of its nearly 1,200 stores in the U.S. as of this week after temporarily closing them to stop the spread of the virus. The department store chain said stores that have reopened are about 60% as productive as they were before the pandemic. The company expects that to increase as people become more comfortable shopping in person again.