The residential construction spending rate dropped 17.6 percent in May compared to the same month last year, the U.S. Census Bureau announced today, falling for the 15th consecutive month and reaching its lowest level since April 2004.

Residential construction spending fell to a seasonally adjusted annual rate of $549 million in May, compared to $665.9 million in May 2006, according to the report. This rate is a projection of a monthly total over a 12-month period, adjusted for seasonal variations in construction activity.

The adjusted annual rate of spending for all types of construction reached $1.18 trillion in May, down 2.8 percent compared to the May 2006 estimate of $1.21 trillion.

About 43.9 percent of new and resale homes sold in the first quarter were affordable to families earning the national income, according to the latest Housing Opportunity Index data released this week by the National Association of Home Builders trade group and Wells Fargo.

That compares to 41.6 percent of homes sold in fourth-quarter 2006 and 41.3 percent of homes sold in first-quarter 2006.

An estimated 93.5 percent of homes in Kokomo, Ind., were affordable for median-income families, according to the report, making it the most affordable metro area in the country.

North Las Vegas, Nev., was the fastest-growing city in the U.S. from July 1, 2005, to July 1, 2006, among cities with a population of 100,000 or more, according to U.S. Census Bureau data released this week.

The city of North Las Vegas grew 11.9 percent, from a population of 176,527 in July 2005 to 197,567 in July 2006, according to the report.

McKinney, Texas, was next on the list with 11.1 percent growth, followed by Port St. Lucie, Fla., with 9.9 percent growth; Cape Coral, Fla., 8.1 percent; Gilbert, Ariz., 7.8 percent; Grand Prairie, Texas, 6.6 percent; Peoria, Ariz., 5.8 percent; Cary, N.C., 5.1 percent; Denton, Texas, 5.1 percent; and Lancaster, Calif., at 5 percent.

Federal regulators have finalized new guidance on subprime lending, instructing banks and other lenders to qualify borrowers at the fully indexed rate, and not allow stated income and reduced documentation unless mitigating factors “clearly minimize the need for verification of a borrower’s repayment capacity.”

The guidance on subprime lending, which applies to many adjustable-rate mortgages, also includes consumer protections including more thorough disclosure of loan terms and limits on prepayment penalties for borrowers seeking to refinance to avoid an interest rate reset.

Blackstone Driving Rents Upward in Boston
Blackstone Group is driving office rents upward in Boston. The company has recently signed tenants to leases at $90/sf at One Post Office Square and Rowe’s Wharf, Boston properties that it picked up in its acquisition of Equity Office Properties Trust earlier this year. The rates compare to averages of $62/sf in Boston’s Back Bay area and $56.25/sf in the financial district. Rents in those markets increased 56% and 42% respectively over the past year, and area brokers say that rents of $80/sf and more are becoming more common.