Wed. 9:09 a.m. (UPDATE 11:49 a.m.): US home construction slips 0.9 percent to 1.25 million in June

In this June 14 photo, construction workers perform tasks on an apartment building in Orlando, Fla. This morning, the Commerce Department reported that U.S. home construction slipped 0.9 percent in June. (AP Photo/John Raoux)

WASHINGTON (AP) — U.S. home construction slipped last month as an uptick in the building of single-family homes was offset by a big drop in apartment construction.

The Commerce Department said this morning that construction was started at a seasonally adjusted annual rate of 1.25 million in June, down 0.9 percent from 1.27 million in May. Construction of single-family homes rose 3.5 percent, but apartment building skidded 9.4 percent.

Applications for building permits, an indication of future construction, fell 6.1 percent last month to 1.22 million, the lowest since May 2017.

Falling mortgage rates are expected to spur home construction, overriding other concerns such as shortages of building lots and construction workers. The average rate on a 30-year, fixed-rate home loan last week stood at 3.75 percent, down from 4.53 percent a year ago.

“Still, pullback in building permits in June suggests further weakness could be in the pipeline,” Shernette McLeod, economist at TD Economics, said in a research note. “Rising costs, lack of land and labor shortages continue to pose challenges to builders, impeding their ability to fully take advantage lower borrowing rates to construct more in demand entry-level units.”

Home construction overall was up 6.2 percent last month from June 2018. Single-family construction slid 0.8 percent and apartment building jumped 25.3 percent from a year earlier.

Housing starts rose 31.3 percent from May to June in the Northeast and 27.1 percent in the Midwest but fell 9.2 percent in the South and 4.9 percent in the West.

Separately, the National Association of Realtors this morning reported a big drop in foreign investment in U.S. homes. The association found that foreign buyers bought $77.9 billion worth of existing U.S. homes from April 2018 through March this year. That marked a 36 percent drop from the same period a year earlier.

“A confluence of many factors — slower economic growth abroad, tighter capital controls in China, a stronger U.S. dollar and a low inventory of homes for sale — contributed to the pullback of foreign buyers,” said Lawrence Yun, the association’s chief economist. “However, the magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.”