US housing starts tumble in June

US housing starts dropped a sharp 9.9 percent in June while building permits also fell, amid a bumpy housing recovery, according to Commerce Department data released Wednesday.

Starts on privately owned housing fell to an annualized pace of 836,000, from an upwardly revised May estimate of 928,000, the department said.

The decline was led by multifamily units, a particularly volatile sector, which plummeted almost 27 percent.

Starts on single-family homes fell 0.8 percent.

Building permits, an indicator of potential growth in housing construction, dropped 7.5 percent from May to a rate of 911,000.

Both declines surprised analysts, who on average expected rises to 958,000 starts and one million permits.

Despite the month-on-month slowdown, the June readings were far stronger than a year ago, highlighting the continued rebound in the housing sector after a price bubble crashed in 2006.

Housing starts were up 10.4 percent from June 2012, while building permits were 16.1 percent higher.

“Weather likely played a role in suppressing starts in June,” said IHS Global Insight in a research note, citing National Climatic Data Center saying it was the 13th wettest June on record.

The economists downplayed the June report, pointing instead to extremely tight inventories in the housing market as a source of growth.

“Since builders are undersupplying the market, inventories are likely to get leaner in the months ahead, and prices are likely to accelerate. This will bring more builders into the market,” they said.