June Housing Construction Drops

WASHINGTON D.C. - Housing construction dropped in June to its lowest level in just over a year, another sign that the economy slowed down last month over previous months.

The number of housing projects that builders broke ground on was a seasonally adjusted annual rate of 1.80 million units, an 8.5 percent drop from May's level, the Commerce Department reported Tuesday.

During testimony before the Senate Banking Committee on Tuesday, Federal Reserve Chairman Alan Greenspan noted that despite a lull in June economic data, including retail sales, the nation's payroll situation, industrial production and housing construction, the economy is looking up.

?EUR??,,????'??While there has been weakness in June, ... I might say that July seems to be somewhat better, even though we are going through a soft patch,?EUR??,,????'?? he said.

According to the housing report, construction fell across all regions of the country.

The number of housing units builders started in the Northeast last month fell by 3.5 percent to a seasonally adjusted annual rate of 165,000. In the Midwest, housing activity declined by 11.5 percent to a pace of 315,000. In the South, housing starts went down by 3.1 percent to a pace of 846,000, and in the West they dropped by 16.5 percent to a pace of 476,000.

Although the 1.80 million pace was the lowest since May 2003 and was weaker than economists expected, it still represented a respectable level of activity.

Housing construction in May rose by 0.4 percent from the previous month, according to revised figures. That turned out to be stronger than the decline previously estimated.

Despite the June figures, homebuilders still feel pretty good about sales prospects for July as well as for the next six months, according to a monthly survey by the National Association of Home Builders.

?EUR??,,????'??Home sales continue to run hot this summer, and most builders don't see a slowdown on the horizon,?EUR??,,????'?? said the association's president, Bobby Rayburn.

Privately owned housing completions in June were at a seasonally adjusted annual rate of 1,848,000, down 3.9 percent from May, but 11.5 percent above June 2003. Single-family housing completions in June 2004 were at a rate of 1.54 million. This is 1.5 percent above the May 2004. The June rate for units in buildings with five units or more was 288,000.