US housing starts fall, building permits up
The Commerce Department has today revealed US housing starts plummeted in June – far more than expected, raising fears for the already fragile housing market.
According to the Commerce Department, construction of new US homes fell 5% in the month to a seasonally adjusted annual rate of 549,000 properties – the lowest since October 2009 and represented the second consecutively monthly fall.
Analysts had expected an annual rate of 575,000.
In the meantime, applications for building permits, a barometer of future home construction, rose by 2.1% to a seasonally adjusted annual rate of 586,000.
The figures come just a day after the National Association of Home Builders (NAHB) revealed a fall in confidence.
The US home builder sentiment index fell in July to the lowest level since April 2009.
According to the index, confidence among US home builders continued to slump as the US housing market continues to struggle and weakens demand for construction.
The National Association of Home Builders said its index fell from 16 to 14 in July – worse than economists had expected.
It was the second consecutive month that home builder sentiment declined and according to the Association, builders are being hampered by competition from foreclosed homes selling at bargain prices, as well as tight credit conditions.
Meanwhile, in related news, the Labor Department has today revealed that US consumer prices fell for the third consecutive month in June, by 0.1% on a monthly basis.
The fall was attributed to declines in energy prices, which were down 2.9%, food prices remained flat.
The fall in June followed declines of 0.1% and 0.2% in April and May respectively.
However, last month’s fall has raised fears of deflation in the world’s largest economy and will add to pressure on the Federal Reserve to take action to push inflation into positive territory.