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Housing Starts Unexpectedly Drop

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NEW YORK (TheStreet) -- Housing starts unexpectedly fell in June to a seasonally adjusted rate of 836,000, the lowest level since August 2012.

The Census Bureau and Department of Housing and Urban Development said Wednesday that housing starts were down 9.9% from a revised 928,000 units in May, but still 10.4% higher than the year-ago figure of 757,000.

Economists had expected housing starts to rise to 951,000 from the original estimate of 914,000.

Single-family housing starts in June were at a rate of 591,000, 0.8% below the May revised figure of 596,000.

Building permits also declined to 911,000, down 7.5% from a revised May figure. Year-over-year building permits were up 16.1%.

The drop comes as a surprise, as homebuilder sentiment has remained positive. National Homebuilder Sentiment Index shot up to 57, its highest level since January 2006, with solid improvement across regions.

Homebuilders however completed construction of more homes in June. Housing completions in June were a seasonally adjusted 755,000, up 6.3% from a revised May estimated of 710,000 and up 20% from the June 2012 rate.

Homebuilders are having to ramp up construction after a multi-year lull as an acute shortage of homes available for sale have driven home prices higher.

Homebuilder construction would have to increase by 50% to ease the shortage of homes, according to National Association of Realtor's economist Lawrence Yun.

-- Written by Shanthi Bharatwaj in New York.

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-- Written by Shanthi Bharatwaj in New York.

>Contact by Email.