Housing Starts in U.S. Probably Decreased to 17-Year Low as Sales Slumped

from Bloomberg:



Housing Starts in U.S. Probably Fell in June to 17-Year Low

By Timothy R. Homan

July 17 (Bloomberg) -- Builders probably broke ground in June on the fewest houses in 17 years, signaling the real- estate recession will keep hurting growth, economists said ahead of a government report today.

Housing starts fell to a 960,000 annual pace last month, the weakest since March 1991, from 975,000 in May, according to the median of 76 forecasts in a Bloomberg News survey. Building permits, a sign of future construction, probably fell to a 965,000 rate from 978,000.

Builders are cutting back as rising foreclosures, higher mortgage rates and declining property values threaten to depress home sales further. The slump in financial markets brought on by mounting subprime losses may prompt lenders to choke off credit, making the situation even worse.

``Mortgage rates have edged higher and distress in financial markets has escalated, keeping potential buyers on the sidelines,'' said Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York. ``Until the supply comes down, builders would rather cut construction.''

The Commerce Department's report on starts is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from annual rates of 925,000 to 1.03 million.

Other reports today are projected to show first-time claims for jobless benefits rebounded last week and manufacturing in the Philadelphia region contracted in July for an eighth month. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aq3RLvihHaQc&refer=home