WASHINGTON (7/18/13)--Housing starts and permits for future home construction in the U.S. unexpectedly dropped in June--with starts at their lowest level in 10 months, the Commerce Department said Wednesday.
The decline indicated an unsettled housing market--with rising mortgage rates potentially dampening new activity--and a significant slowdown in second-quarter U.S economic activity (The New York Times, Bloomberg.com, The Wall Street Journal and Moody's Economy.com July 17).
Starts dropped 9.9% to a seasonally adjusted annual rate of 836,000 units--the lowest level since August 2012. Economists had forecast a gain up to a 959,000-unit rate last month, according to a Reuters poll.
Also, permits to build homes decreased 7.5% in June to a 911,000-unit pace. Economists had forecast a 1.1 million-unit pace, the Times said.
Last month's decline was spearheaded by a downward slide in multifamily construction projects--which sometimes are volatile, Bloomberg said.
There will be setbacks as construction gears up, but June's slump should not be of immediate concern because the housing market will drive economic growth, Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLP in Philadelphia, told Bloomberg.