WASHINGTON – U.S. builders started work on fewer homes in June, mostly because apartment construction fell sharply. But applications for permits to build single-family houses rose to the highest level in five years, suggesting the housing recovery will continue.
Developers began construction at a seasonally adjusted annual rate of 836,000 homes in June, the Commerce Department said Wednesday. That was nearly 10 percent below Mays total of 928,000, which was revised higher, and was the fewest since August 2012.
Most of the drop occurred in apartments, where starts fell almost 27 percent in June from May. Apartment construction is volatile from month to month.
Applications for permits to build single-family homes rose for the third straight month to 624,000, the highest since May 2008. That suggests home construction should rebound in the coming months. Overall, permits fell to 911,000 in June from 985,000 in May, which was also revised higher.
Despite Junes decline, builders started work on 10 percent more homes last month compared with a year earlier.
And permits are 16 percent higher than a year ago.
Todays drop in starts is more a pause in an otherwise improving trend, said Jonathan Basile, an economist at Credit Suisse.
The uptick in permits for single-family home construction echoed a report Tuesday that showed confidence among homebuilders rose in June to its highest level since January 2006.