US housing starts fell more than expected in June to their lowest level since last October as demand for housing plunged, a government report showed Tuesday, supplying further evidence the economy was losing momentum during the second quarter. The Commerce Department reported that construction of new houses and apartments in June fell 5 percent from the previous month to an annual rate of 549,000, the lowest level in eight months. It was the second consecutive month of decline in housing starts. Driving the June decline was a more than 20 percent drop in the volatile condominium and apartment market. Construction of single-family homes-the biggest section of the market-was down only slightly, falling 0.7 percent. One positive area of Tuesday report was an increase in applications for building permits - a sign of future activity - which rose 2.1 percent from May to an annual rate of 586,000. The weak job market and competition from foreclosed properties have forced builders to limit construction, especially after popular government tax credits that sparked sales expired at the end of April. In a typical recovery from recession, the construction sector provides much of the growth, but that is currently not the case. While developers have reduced construction and the number of new homes on the market has dropped significantly, they still must compete against foreclosed homes selling at steep discounts.
