WASHINGTON - Homebuilders are sending a message: They can't contribute much to the economic recovery now that government home-buying incentives have vanished.

Home construction and applications for building permits sank in May, overshadowing favorable reports on manufacturing and wholesale inflation.

Fewer homes means 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 near-record-low mortgage rates and a glut of foreclosed properties on the market, 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."

Overall, new home and apartment construction fell 10 percent in May to a seasonally adjusted annual rate of 593,000, the Commerce Department said Wednesday. April's figure was revised downward to 659,000.

Applications for new building permits sank 5.9 percent to an annual rate of 574,000.