In what was a surprise to economists hoping that at least the housing market was getting out of the doldrums, new housing starts plummeted in June from what was a two-year high the previous month.
The market for new homes fell by 8.4 percent to an annual rate of 350,000, the lowest since this past January, according to the a report issued by the Commerce Department in Washington.
“A dearth of construction has led to a very significant inventory shortage,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York. “If you want to buy a newly built home, good luck finding one.”
Supply could not meet demand in June as record-low mortgage rates and dependable home prices pushed buyers into the new-home marketplace. One indication that the new-housing market is on the verge of advancing is the projected growth of equipment suppliers such as Caterpillar Inc, manufacturer and supplier of heavy building equipment such as excavators, scrapers and bulldozers. Today Caterpillar raised its full-year earnings forecast based on the belief that construction companies will need to replace old equipment as the new-housing industry begins its upward move.
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