U.S. Housing Starts Drop 4.8%

Builders broke ground for new single and multi-family homes in May at an annual rate of 708,000 units, down from a 744,000-unit pace the previous month, the Dept. of Commerce says.

The department revised April's rate sharply upward, thus making it the highest in 43 months.Economists have cited the weak housing market as a drag on consumer confidence and auto sales in recent years.

Groundbreaking for single-family homes rose 3.2% from April to a 516,000-unit annual rate in May, marking the third straight month-over-month increase. Economists say pent-up demand and ultra-low mortgage rates are boosting sales of such dwellings. The average 30-year fixed mortgage rate fell to a record-low 3.67% in the first week of June.

Single-family gains were offset by a 21% drop to 192,000 units for multi-family dwellings, the slowest pace this year.

Building permits, considered a gauge of home starts in coming months, rose 7.9% to an annual rate of 780,000 units in May. That marked the highest level since September 2008.