WASHINGTON — U.S. housing starts slipped 5.0% to a seasonally adjusted annual rate of 549,000 in June, the Commerce Department reported Tuesday, as sector activity continued to wane after the demise of the housing tax credit.
June home-building permits increased 2.1% to 586,000. The level of housing starts reached an eight-month low while the increase in building permits reversed two straight months of declines.
Economists polled by Thomson Reuters had expected 580,000 housing starts and 570,000 building permits.
Diane Swonk, chief economist of Mesirow Financial, said the rate of new home construction is a fraction of the two million monthly starts routinely recorded during the housing boom and it is possible the Fed will resume purchases of mortgage-backed securities if conditions do not improve.
Starts have averaged 620,000 a month during the two-year period that began in July 2008, compared with 1.735 million during the five years that preceded that span.
“Housing starts continued to plummet from the modestly elevated levels we saw when housing tax credits were still lifting demand,” Swonk said of the June data. “The housing market is still extremely fragile and dependent on government support.”
Housing starts fell in all four U.S. regions. Single-family housing starts fell to a 13-month low of 454,000. May housing starts were revised lower to 578,000 from the originally reported 593,000.
June building permits rose in the Northeast and West, but fell in the South and Midwest. Permits for single-family homes fell to 421,000, the third consecutive monthly decline. Total building permits for May were unrevised at 574,000.
