U.S. Housing Starts Rose in June
Wednesday July 18, 9:06 am Eastern Time
By Mark Felsenthal
WASHINGTON (Reuters) - U.S. housing starts climbed in June, but in a potential sign things may slow in the housing market, building permits declined, the government said on Wednesday.
The Department of Commerce reported ground-breaking for new homes reached a seasonally adjusted annual rate of 1.658 million units in June, a 3 percent increase from the May rate of 1.610 million. Starts were 6.3 percent above a year ago, and the highest rate since 1.666 million units in January.
Economists had forecast June starts would come in at a seasonally adjusted annual rate of 1.607 million units.
``The housing sector continues to be a surprise in this slowdown,'' said Kurt Karl, U.S. chief economist at Swiss Re in New York. ``There continues to be very strong demand on housing.''
At the same time, permits, an indication of the confidence of builders in the economy, fell 3.3 percent in June to a seasonally adjusted annual rate of 1.568 million. Permits were a scant 0.1 percent higher than a year ago.
It was the lowest level in permits since December, when permits were at a seasonally adjusted annual rate of 1.553 million. That level was below the expectations of analysts, who forecast permits at a 1.603 million rate in June.
Regionally, the only decline in housing starts was in the West, where groundbreaking dropped by 2.6 percent. In the Northeast, starts jumped 9.2 percent, while in the South, groundbreaking for new homes climbed 6.6 percent. Starts were unchanged in the Midwest.
The housing sector, as measured in starts, new and existing home sales and construction spending, has been a bright spot in an otherwise gloomy U.S. economy most of the year, with low interest rates prompting people to refinance or purchase new homes. But analysts have suggested housing would eventually feel the effects of the overall slowdown in the economy.
The rates for thirty-year fixed rate mortgages, the most common type of home-buying loan, rose to 7.21 percent in the week ending July 13, according to mortgage finance company Freddie Mac. That level was the highest in six weeks, although 30-year rates averaged 8.09 percent a year ago.
Freddie Mac predicted interest rates for mortgages would remain in the low 7-percent range at least through the summer, and economists have predicted 2001 will be a banner year for the housing market.
Mortgage rates were not affected by the Federal Reserve's most recent interest rate cut, its sixth this year, as investors looked ahead to the recovery of the economy from its sluggish performance this year. The U.S. central bank's latest rate-cutting action was on June 27, bringing the federal funds rate to its lowest level in more than seven years, and the Fed has signaled it is prepared to do more should the economy deteriorate further. |
