New-Home Starts Rise 4.8% in June

Housing starts rebounded in June as favorable mortgage rates and job and income growth renewed builders’ confidence in consumer demand, it was reported Thursday.

Many analysts expect the housing market to level off or perhaps slip slightly later this year as pent-up demand becomes satisfied in an economic expansion now in its seventh year.

But, they added, builders will remain busy this summer rebuilding new-home inventories that represented in May a supply of 4.1 months at that month’s sales rate, the smallest in 26 years.

“It’s steady as she goes for the rest of the summer,” said economist David Lereah of the Mortgage Bankers Assn. “Then, the numbers start coming down.”

Builders boosted construction of new homes and apartments by 4.8% in June, to a seasonally adjusted annual rate of 1.45 million, the Commerce Department reported Thursday. All regions except the Northeast shared in the gain. Starts in the West, dominated by California, were up 1.1% to 362,000.

Housing starts totaled 1.48 million in 1996, the most since 1.49 million eight years earlier.

Separately, the Labor Department reported that new claims for jobless benefits fell by 28,000 last week to a seasonally adjusted 349,000. Analysts had attributed an increase of 40,000 the previous week to automobile plant closings for annual new-model retooling.

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Housing Starts

Seasonally adjusted annual rate, millions of units:

June: 1.45

Source: Commerce Department