Homebuilders no longer able to aid recovery

Homebuilders are sending a message: They won't be able to contribute much to the economic recovery now that government homebuying incentives have vanished. Home construction and applications for building permits sank in May, overshadowing favorable reports on manufacturing and wholesale inflation. Fewer homes mean fewer jobs. Construction fuels a broad swath of industries across the economy. Yet double-digit unemployment is among the main reasons people have passed on buying new homes. Even with nearly record-low mortgage rates, the industry is struggling. "The economy is growing, and the housing market is still in recession," said Eugenio Aleman, senior economist with Wells Fargo Securities. "It's not going to contribute to growth, but it is not going to pull the economy back down."

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