Housing Starts Fall; So Do Jobless Applications : Economy: Home building is expected to begin rising again. Unemployment assistance requests are at a nine-month low.

Construction of new homes tumbled 3.2% in June, the government said Thursday. But analysts said they should turn up modestly starting in July because of the lowest mortgage rates in two decades.

The government also reported that first-time applications for unemployment benefits fell in early July to the lowest level in nine months.

Construction of new homes and apartments fell in every region of the country in June except for the West, where they rose for the second month in a row.

Nationally, starts totaled 1.17 million at a seasonally adjusted annual rate, according to the Commerce Department. That was down from 1.21 million in May.

“We have to realize that these June figures are pre-discount rate cut figures, and in the coming months, we should see substantial improvement,” said Jean Sundrla of Evans Economics, a Washington forecasting firm.

On July 2, the Federal Reserve slashed both the discount rate, which it charges commercial banks for loans, and the federal funds rate, which banks charge each other for overnight loans.

Mortgage rates, which had been falling gradually, immediately began to drop sharply. By last Friday, 30-year, fixed-rate mortgages were averaging 8.13%, down from their 9.03% peak in March and the lowest since July, 1973.

Even with the lower U.S. mortgage rates, most analysts expect any improvement in housing to be modest and well below the 1.7 million level of starts in 1983 and 1984, the years after the previous recession.

“Until people feel better about the economy and the job market, housing is going to be held down,” said economist David F. Seiders of the National Assn. of Home Builders.

The Labor Department suggested some improvement in employment during the week ended July 4. It said first-time claims for jobless benefits dropped by 15,000 to 401,000, down from 416,000 a week earlier and the lowest level since claims totaled 401,000 during the week ended Oct. 5.

A four-week moving average, which analysts prefer because it evens out the often volatile weekly numbers, also fell during the period ended July 4.

Housing Starts

Seasonally adjusted annual rate, millions of units

June, ‘92: 1.17

May, ‘92: 1.21

June, ‘91: 1.04

Source: Commerce Department