U.S. Housing Starts Drop to Lowest Level in 17 Years

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from Bloomberg:



U.S. Housing Starts Drop to Lowest Level in 17 Years (Update2)

By Courtney Schlisserman

June 17 (Bloomberg) -- Builders in the U.S. broke ground in May on the fewest houses in 17 years, signaling declines in construction still represent the biggest risk to the economy.

Housing starts fell 3.3 percent to a 975,000 pace from a revised 1.008 million in April, the Commerce Department said today in Washington. The reading was below economists' forecasts and the lowest since March 1991. Building permits, a sign of future construction, fell 1.3 percent to a 969,000 rate.

Rising foreclosures, higher mortgage rates and declining property values threaten to keep home sales depressed in coming months, discouraging builders from starting new projects. Spending on residential projects may continue to be a drag on growth the rest of this year as builders try to work off excess inventories.

``The downtrend is still in place,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. ``Inventories are still very high, prices are still coming down. None of that argues for a turnaround yet.''

A separate report showed that U.S. producer prices climbed more than forecast as fuel and food costs jumped. The producer- price index rose 1.4 percent in May from April, the biggest increase since November. The Labor Department's figures also showed that prices rose 0.2 percent excluding food and energy. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601068&sid=aVrx2EuK2NzU&refer=home