U.S. Housing Starts Fall by 9.9% In June; Building Permits Decline, Too, as Rising Mortgage Rates Pose Threat
WASHINGTON--Construction of new homes fell sharply in June, highlighting risks to the sector's recovery from rising mortgage rates and supply constraints.</br></br>Housing starts declined 9.9% in June from a month earlier to a seasonally adjusted annual rate of 836,000 units, the Commerce Department said Wednesday. Building permits, a key measure of future construction activity, fell by 7.5%. The readings were much worse than expected, with most economists forecasting modest gains in both categories.</br></br>But the decline in housing starts was primarily driven by a 26% drop in multifamily housing, a category that has traditionally been volatile and has lately shown signs of overbuilding. Starts for single-family homes, which account for the largest share of activity, fell by 0.8%. Single-family permits rose 0.1%.</br></br>"The outlook for housing is still bright," said Moody's Analytics economist Celia Chen. She said the June data "is more of a hiccup."</br></br>The housing sector has been strengthening in recent months as low prices and steady employment gains have fueled stronger demand. The rebound has been providing key support to the U.S. economy, helping to offset public-sector budget cuts and a struggling manufacturing sector hit by weak overseas demand.