US housing starts plunge 5.0 percent in June

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US housing starts plunge 5.0 percent in June

WASHINGTON — US housing starts plunged 5.0 percent in June, official data showed Tuesday, declining far more than expected as the home building industry reels amid a fragile economic recovery.

By (AFP)

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Published: Tue 20 Jul 2010, 6:58 PM

Last updated: Mon 6 Apr 2015, 10:37 AM

Construction starts on privately owned homes fell to a seasonally adjusted annual rate of 549,000 in June, the second consecutive month of decline and the slowest rate since October 2009, the Commerce Department said.

That was 5.0 percent below the May rate of 578,000, revised sharply downward from an initial estimate of 593,000.

The average analyst forecast was for 575,000 housing starts.

June starts were 5.8 percent below the rate a year ago.

The decline was almost exclusively in the volatile multiple-family housing sector, which represents less than 20 percent of housing starts.

Housing starts on single-family homes, the biggest share of US housing, fell only 0.7 percent after dropping 18.8 percent in May.

Building permits, a forward-looking indicator on the housing construction sector, unexpectedly rebounded, by 2.1 percent, after two months running of sharp declines.

Permits to begin construction on privately owned housing climbed to a seasonally adjusted annual rate of 586,000, the department said.

Most analysts had expected the June reading to dip 2,000 from May to 572,000.

The improvement in building permits was led by the volatile multiple-family sector of buildings with five units or more, up 19.6 percent.

Permits for single-family homes fell for the third month in a row, by 3.4 percent.

“The housing sector remains in a state of weakness,” analysts said in a client note.

“The details of the data, however, suggest a more sideways move in long-term construction trends than another downward shift,” they said, citing the small dip in single-family starts, “which tend to be fairly stable.”

The report was the latest sign of weakness in the housing market, the epicenter of the financial crisis that sent the economy into recession in December 2007.

The National Association of Home Builders reported on Monday that its index on builder confidence in the market for new, single-family homes fell for the second month in a row in July to its lowest level since April 2009.

The expiration of the government’s tax credit program to boost homebuying on April 30 has left the sector without a prop amid the tentative recovery.

Despite bargain-basement home prices, high unemployment and job insecurity have left many would-be homebuyers reluctant to risk a major investment.

“The key story here is that the inevitable sharp drop in activity in the wake of the expiration of the tax credit on April 30 is over, more or less, but it will be a while before any recovery starts,” said Ian Shepherdson at High Frequency Economics.

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