On Wednesday, the Commerce Department released data showing that U.S. housing starts in June fell to an annualized rate of 836,000 units, down 9.9%. The drop surprised economists who had predicted that housing starts would increase to an annualized rate of 959,000 units, Reuters notes.
Housing starts in June fell to their lowest rate in ten months. Permits to construct new houses dropped to an annualized rate of 911,000 units, down 7.5%. That also disappointed economists who had forecast permits to increase of an annualized rate of one million units.
Multi-family home starts dropped 26.2% in June, while single-family home starts dipped just 0.8%. The multi-family home segment is traditionally more volatile. Still, single-family housing starts fell to a 591,000-unit annualized rate, the worst showing since November 2012.
The weak June housing start numbers provide further evidence that the U.S. economy cooled significantly during the second quarter.
Investors brushed off the news, sending homebuilder stocks up. Shares of Toll Brothers (TOL) and Ryland Group (RYL) climbed more than 2% in Wednesday morning trading, while D.R. Horton (DHI) rose more than 1%.