Housing starts were up 2.3% to 1.467 million annual starts, an about face from May's revised 3.4% drop to 1.434 million. Originally, the Commerce Department reported a milder 2.1% drop in May. June starts beat economist forecasts, who thought starts would fall 1.6% to 1.45 million. Overall, housing starts are now down 25.2% from June 2006. On Tuesday, the National Association of Home Builders said its sentiment index fell to its lowest level since January 1991 amid worries over higher interest rates and problems in the subprime mortgage market. However building permits, which are a more clear indication of future activity, fell 7.5% to 1.406 million annually in June, reversing a May gain of 4.3%. Economists thought permits would fall a milder 2.6%. Broken down, single-family home starts dropped 0.2%, two-or-more family units were up 12.5%, and multi-family units (5 units or more) were up 12.9%. "The housing market remains fairly shaky," said BMO's Sal Guateiri. "All of the strength" was in multi-family housing. Next week June sales of new and existing homes will be reported.
Sources: Press release, Wall Street Journal, Bloomberg
Commentary: Pulte Homes Warns of Worse Than Expected Q2 Loss • The Fallout From the Subprime Debacle Continues • Are Homebuilding Investors Getting a Second Chance?
Stocks/ETFs to watch: streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB), iShares Dow Jones US Home Construction (NYSEARCA:ITB)
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