New home construction drops, but outlook brightens

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- New home construction fell to an 8-month low in June, but there were indications of increased activity in coming months, the government said Tuesday.

Housing starts fell 5% from May to a seasonally adjusted annual rate of 549,000 last month, the Commerce Department said. That was the lowest rate since October 2009.

Economists were expecting housing starts to fall to 575,000. On a year-over-year basis, starts sank 5.8% from June 2009.

"The housing industry remains stuck in a rut, with both sales and construction activity moribund," said Mike Larson, real estate analyst at Weiss Research. "Builders simply lack the confidence -- or in some cases, the financing -- to ramp up construction, especially in the wake of the home buyer tax credit's expiration."

But building permits, a gauge of future construction activity, rebounded last month, posting the first gain since March. Permits rose to a seasonally adjusted annual rate of 586,000 last month, up 2.1% from a revised 574,000 in May.

Economists expected permits to drop to 572,000. Permits were down 2.3% from June 2009.

"Cheap mortgage rates and cheap homes should help ease the housing market's pain," Larson said. "But until we see signs of life in the labor market, we're just not going to see a robust recovery -- only more malaise."

The monthly fall in housing starts followed a sharp drop in May, the first month after the end of a government tax incentive of up to $8,000 for homebuyers.

New construction of single-family homes, the key sector of the housing market, slipped 0.7% last month to an annual rate of 454,000.

The annual rate for new construction of multi-family homes -- buildings with 5 or more units -- was 88,000.  To top of page


Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.23%4.19%
15 yr fixed3.26%3.27%
5/1 ARM3.70%3.38%
30 yr refi4.22%4.18%
15 yr refi3.26%3.26%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,279.74 13.75 0.08%
Nasdaq 4,579.79 -13.64 -0.30%
S&P 500 2,010.40 -0.96 -0.05%
Treasuries 2.59 -0.04 -1.60%
Data as of 6:28pm ET
Company Price Change % Change
Yahoo! Inc 40.93 -1.16 -2.74%
Microsoft Corp 47.52 0.84 1.80%
Bank of America Corp... 16.95 -0.09 -0.53%
Oracle Corp 39.80 -1.75 -4.21%
Facebook Inc 77.91 0.91 1.18%
Data as of Sep 19

Sections

The automaker is recalling Cadillac XTS and Chevrolet Impalas because of a problem with the electronic parking brake arm. More

The Bill and Melinda Gates Foundation has given more money than many western nations. More

It's really good to be Larry Ellison. The Oracle founder is stepping down as CEO, so maybe he'll have more time to enjoy his glamorous life. More

As Occupy Wall Street goes on its debt-abolishing tear, thousands of people across the country are begging them to forgive their loans. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.