US housing starts continue to decline

Worries about the strength of the recovery in the US economy resurfaced yesterday as it emerged that the construction of new homes had declined to its lowest level in eight months, though optimists found some support with a rise in building permits.

Figures from the US Commerce Department showed that housing starts had dropped by 5 per cent to a seasonally adjusted annual rate of 549,000 – the lowest level since October. The June decline was the second in as many months, and was below market forecasts anticipating a rate of 580,000. Those looking for a silver lining turned to data on building permits, which were unexpectedly higher last month.

Applications for building permits rose by 2.1 per cent in June, taking the annual rate to 586,000. The increase suggests that, though slow at the moment, construction activity could make gains in July and the months ahead. The 2.1 per cent increase compares with a 5.9 per cent decline in May. Market analysts had expected the rate to ease to 570,000 in June.