Washington, DC, July 20--Home construction took its biggest tumble in more than a year during June, as mortgage rates crept upward and hiring weakened. Building permits, which provide a glimpse of future demand, also fell sharply.
The Commerce Department reported today that housing starts decreased 8.5% to a seasonally adjusted 1.802 million annual rate, the sharpest drop since February 2003's 10.7% plunge. Starts rose 0.4% in May to a 1.970 million rate. That marked an upward revision from a previously reported 0.7% decline to 1.967 million. Mortgage rates, while still relatively low, had climbed over 6% in the spring.
Economists has projected June housing starts would increase by 1.2% to a 1.990 million annual rate. But the weaker-than-expected report is consistent with other recent economic data -- including weak retail sales and a lackluster jobs report -- that suggested the economy hit a rough patch last month.
New building permits decreased by 8.2% to a 1.924 million annual rate. Permits had climbed 4.5% in May. Single-family housing starts dropped by 9.5% in June, while multi-family starts -- that is, apartment-building construction -- rose by 4.1%.
Regionally, starts fell 3.5% in the Northeast, 11.5% in the Midwest, 3.1% in the South and 16.5% in the West last month.
