New home construction fell in June, driven by a plunge in the South

Dragged down by a sharp drop in the South, home construction starts in June unexpectedly fell 9.3% nationally from May to a seasonally adjusted annual rate of 893,000, the Commerce Department said Thursday.

Economists had expected housing starts to climb after falling in May.

But construction plunged 29.6% in the South, a major home building region. All other regions posted increases in June; in the West starts rose 2.6%.

The monthly Commerce report does not analyze the data and therefore doesn’t indicate possible causes for the sharp drop. Weather may have been a factor, one analyst said.

The report was a disappointment following recent signs that the housing market may be heating up again after cooling last summer amid higher mortgage rates.

Home sales have risen nationally as mortgage rates have fallen from recent highs and more homes go up for sale.

Also, a trade group on Wednesday said that home builder confidence rose to a six-month high.

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