Reply #5: U.S. Housing Starts Fell 0.7% to 1.967 Million Rate in May

[UpInArms]

http://quote.bloomberg.com/apps/news?pid=10000006&sid=a...

June 16 (Bloomberg) -- U.S. homebuilders broke ground on more houses than expected in May, and building permits rose to the highest level in more than 30 years, suggesting that rising mortgage rates have yet to curb demand for new homes, a government report showed.

Housing starts totaled 1.967 million units at an annual pace last month, down 0.7 percent from a revised 1.981 million in April, the Commerce Department reported in Washington. Building permits, a sign of future construction, rose 3.5 percent to a 2.077 million rate.

Builders are starting work on contracts signed earlier in the year when mortgage rates were near record lows. Year-to-date, the pace of housing starts has averaged 2.12 million, on pace to surpass last year's total of 1.85 million, the most in 25 years. The U.S. has had the best five months of job growth since 2000, which is helping to support housing even as mortgage rates rise.

``A better performing economy -- jobs, income growth -- that trumps to a certain point mortgage rates,'' said Ken Mayland, chief economist for Clear View Economics in Pepper Pike, Ohio.

Housing starts were forecast to fall to a 1.95 million rate, the median of 62 economist forecasts in a Bloomberg News survey, from the 1.969 million originally reported in April. Estimates ranged from 1.89 million to 2.01 million.

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