US housing starts were flat in June as a drop in groundbreaking on single-family homes was offset by higher multi-family housing construction, a Commerce Department report showed on Tuesday. A separate report showed retail sales at US chain stores rose in the latest week, with sales of summer-related goods continuing to underpin strength.
"The housing sector remains very strong," said David Resler, chief economist at Nomura Securities International in New York. "Building permits are strong and it's more encouraging news for the general economy."
June housing starts came in at a 2.004 million unit annual rate, unchanged from May, which saw starts revised down from an originally reported 2.009 million unit pace.
Wall Street economists had expected housing starts to increase to a 2.045 million unit pace in June.
Single-family housing starts dropped 2.5 percent to a 1.667 million unit annual pace while multi-family starts jumped 14.2 percent to a 337,000 unit rate, the report said.
Permits for future groundbreaking, an indicator of builder confidence, rose 2.4 percent to a 2.111 million unit pace. That exceeded economists' expectations for an increase to a 2.080 million unit pace in June from a 2.062 million unit pace in May.
Low mortgage rates have supported the housing sector for more than four years. Even though the Federal Reserve has raised its target for short-term interest rates, long-term rates have remained low. In fact, average 30-year fixed-rate mortgages are lower than a year ago, according to finance company Freddie Mac.
For June, housing starts rose 11.4 percent in the US South but fell 12.1 percent in the Midwest, 10.4 percent in the West and 0.5 percent in the Northeast.
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