In the wake of the report on soaring homebuilder confidence, an unexpected drop in housing starts and permits has put a bit of a damper on the housing-market outlook.
Housing starts, which indicate future construction, fell 9.9 percent in June, according to the Commerce Department. The seasonally adjusted annual rate of 836,000 units marks the lowest level since August 2012. Multifamily housing starts led the decline, falling 26.2 percent, compared with 0.8 percent for single-family houses.
Earlier this week, the National Association of Home Builders reported that its index measuring homebuilder confidence reached its highest level in seven years. Since spring, existing home sales have also been on the increase.
In prepared remarks Wednesday, Federal Reserve Chairman Ben Bernanke told Congress that the improving housing market has contributed to recent economic gains, fueling job growth and consumer spending.
Rising mortgage rates cause worry
Mortgage rates, which had increased by more than a full percentage point in recent weeks, fell slightly after Bernanke's remarks. The 30-year fixed-rate dropped to 4.56 percent Wednesday from 4.66 percent a week earlier, according to the Bankrate.com national survey of large lenders.
Although the housing market is expected to continue to improve and boost the economy, rising rates are a worry for homebuyers, while builders are battling a lack of skilled labor and a shortage of materials.
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