WASHINGTON – Beginning home construction unexpectedly declined in June to a nine-month low as a record plunge in the South swamped gains in the rest of the U.S.
Housing starts fell 9.3 percent to an 893,000 annualized rate from a 985,000 pace in May that was weaker than initially estimated, figures from the Commerce Department showed Thursday in Washington. The median estimate of 79 economists surveyed by Bloomberg called for a 1.02 million rate.
Construction slumped 29.6 percent in the South to a 375,000 pace, the weakest in almost two years. The figures, along with a decline in building permits, corroborate Federal Reserve Chair Janet Yellen’s view that progress in the housing market has been “disappointing” this year.
“The big takeaway is two straight months of weakness; housing starts are one of the leading indicators, and something that was anticipated to be a big recovery in the spring just has turned out not to be,” Jay Morelock, an economist at FTN Financial in New York whose starts estimate was among the lowest in the Bloomberg survey. “Going forward we see more or less a stabilization. I don’t think it’s going to crash and I don’t think it’s going to accelerate.”
Another report showed the number of Americans filing applications for unemployment benefits unexpectedly dropped last week. Jobless claims declined by 3,000 to 302,000 in the week ended July 12, the Labor Department said Thursday in Washington. The median forecast of 51 economists surveyed by Bloomberg projected 310,000. The number of people continuing to receive jobless benefits fell to a seven-year low.
Stock-index futures held losses after the reports as the Treasury Department and European Union imposed further sanctions on Russian business over Ukraine. The contract on the Standard & Poor’s 500 Index maturing in September fell 0.4 percent to 1,967.4 at 8:55 a.m. in New York.
Estimates for housing starts in the Bloomberg survey ranged from 957,000 to 1.1 million after a previously reported 1 million in May. Building permits decreased 4.2 percent in June to a 963,000 annualized rate, after falling in May. They were projected to rise to 1.04 million.