Housing Starts in U.S. Decline More Than Estimated to 593,000 Annual Pace

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By Courtney Schlisserman

June 16 (Bloomberg) -- Builders broke ground on fewer U.S. homes in May than anticipated after the expiration of a government incentive.

Housing starts fell 10 percent, the biggest decline since March 2009, to a 593,000 annual rate, from a revised 659,000 pace in April that was less than previously estimated, Commerce Department figures showed today in Washington. Building permits, a sign of future construction, unexpectedly fell to a one-year low. Single-family starts suffered the largest drop since 1991.

Builders focused less on starting new projects and more on completing houses for those seeking to qualify for the tax credit, which required contracts be signed by April 30 and closed by the end of this month. Growth in sales and construction will now depend more on job gains and a drop in foreclosures, which have pushed down prices and created competition for builders.

“With the tax credit expiring and sales slowing down, builders will ease up on starts,” Michael Moran, chief economist at Daiwa Capital Markets America Inc. in New York, said before the report. “I see the housing market staying neutral for a time, moving sideways rather than being a source of growth.”

Economists forecast starts would fall to a 648,000 annual rate, according to the median of 78 projections in a Bloomberg News survey. Estimates ranged from 575,000 to 698,000. ...........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aWcsW4GDevco&pos=2