U.S. homebuilding fell for a second straight month in June and permits dropped t...
WASHINGTON - U.S. homebuilding fell for a second straight month in June and permits dropped to a two-year low, suggesting the housing market continued to struggle despite declining mortgage rates.
Mortgage rates have been decreasing since the Federal Reserve signaled it was pausing its interest rate raising campaign. Borrowing costs could drop further as the U.S. central bank is poised to cut rates this month for the first time in a decade to protect the economy from rising threats from Washington’s trade dispute with Beijing, and slowing global growth.
Data for May was revised slightly down to show homebuilding falling to a pace of 1.265 million units, instead of slipping to a rate of 1.269 million units as previously reported. Economists polled by Reuters had forecast housing starts dipping to a pace of 1.261 million units in June. The housing market hit a soft patch last year and has been a drag on economic growth for five straight quarters. Economists have said housing had no impact on GDP in the second quarter.
The PHLX housing index .HGX fell, underperforming in a broadly weak U.S. stock market. The dollar weakened against a basket of currencies, while U.S. Treasury prices rose.“These prints are in line with our view of a slowing housing market that is likely to continue on a downward trajectory for the rest of this year, but with no significant risks of an immediate slump,” said Igor Cesarec, an economist at Citigroup in New York.
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