Housing Starts in U.S. Rose in June to Highest Since 2008

Beginning construction of U.S. homes rose more than forecast in June to the fastest rate in almost four years, indicating a brighter outlook for the residential real estate market. Housing starts rose 6.9 percent last month to a 760,000 annual pace after a revised 711,000 rate in May that was faster than initially estimated, the Commerce Department reported today in Washington. The median forecast of 79 economists surveyed by Bloomberg News called for a 745,000 rate. Building permits fell, reflecting a drop in applications for apartment construction Record-low mortgage rates and cheaper properties are attracting buyers, encouraging builders faced with lean inventories to boost construction. At the same time, limited employment opportunities and competition from distressed properties are challenges for the industry. The housing market is “starting to show signs of life,” Brian Jones, a senior U.S. economist for Societe Generale SA in New York, said before the report. Americans may still be hesitant to purchase property because “you don’t want to buy an asset whose price may potentially fall,” he said. The June pace of home starts was the fastest since October 2008, and estimates in the Bloomberg survey for June housing starts ranged from 710,000 to 800,000. Ground-breaking on new homes in May was revised from a previously reported 708,000 annual pace. Stock-index futures held earlier losses after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September falling 0.3 percent to 1,354.3 at 8:32 a.m. in New York. The yield on the benchmark 10-year Treasury note dropped to 1.48 percent from 1.51 percent late yesterday.