NEW YORK (CNN/Money) -
Construction starts on new homes in the United States fell in August for the third straight month, the government said Thursday, as the red-hot housing market cooled off.
The Commerce Department said housing starts fell 2.2 percent to a seasonally adjusted annual rate of 1.609 million units after falling a revised 2.8 percent in July. Economists, on average, expected housing starts to rise to a 1.67 million-unit pace, according to Briefing.com.
Building permits, a more leading indicator of demand for new homes, fell 2.5 percent in August to an annual rate of 1.669 million units after rising a revised 0.4 percent in July. Economists expected permits to fall to a 1.69 million-unit rate, according to Briefing.com.
In a separate report, the Labor Department said weekly jobless claims dipped to 425,000 last week from an upwardly revised 433,000 in the week ended Sept. 7.
The reports helped push U.S. stock prices lower, while Treasury bond prices rose.
The housing market has been one of the few pillars of strength in an economy that sank into recession in March 2001.
Persistently low mortgage rates fueled demand for homes, driving prices higher and helping many Americans feel wealthier, despite falling stock prices. Low mortgage rates also encouraged many consumers to refinance their homes, putting more cash in their pockets.
The housing market has been so red-hot, in fact, that some economists have worried that home prices are in a bubble similar to the stock-price bubble of the late 1990s.
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Most analysts, however, so far have dismissed that idea, pointing to low inventory of available homes and the prospect of continuing low mortgage rates as factors supporting a strong housing market for months to come.
According to mortgage security firm Freddie Mac (FRE: Research, Estimates), the average rate on a 30-year fixed-rate mortgage fell this week to 6.05 percent, the lowest rate since the firm started keeping track in 1971.
Consumer spending is crucial to the broader economy, since it makes up about two-thirds of U.S. gross domestic product (GDP), the broadest measure of the economy.
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