WASHINGTON (AP) _ New housing construction edged down in May, after a strong showing the month before, as builders broke ground on fewer single-family homes, apartments and condos.
The Commerce Department reported Tuesday that housing starts fell by 0.4 percent last month to a seasonally adjusted annual rate of 1.62 million. The drop was smaller than many analysts were predicting and left housing starts at a still-healthy level.
The dip in May followed a solid 2.3 percent increase in April, according to revised figures, a better showing than the government previously estimated.
Even as the rest of the economy has slowed markedly since the second half of last year, housing activity has remained stable, thanks to low mortgage rates and falling interest rates in general. That strength is responsible in large measure for keeping the economy out of recession.
In May, the average rate on a 30-year fixed-rate mortgage was 7.14 percent, compared with 8.52 percent for the same month a year ago.
To stave off recession, the Federal Reserve has slashed interest rates five times this year, driving borrowing costs down to the lowest point in seven years. Many analysts believe Fed policy-makers will cut rates again at the end of their two-day meeting June 27.
In May, construction of new single-family homes slipped by 0.2 percent to an annual rate of 1.29 million. Starts of apartments, condos, townhouses and other multifamily housing fell by 1.5 percent to a rate of 331,000.
By region, total housing starts fell by 28.3 percent in the Northeast to a seasonally adjusted annual rate of 132,000. In the Midwest, starts rose by 15.8 percent to a rate of 344,000. In the South, they fell by 1.9 percent to a rate of 724,000, while in the West, they rose 2.9 percent to a rate of 422,000.
While consumer spending has held up fairly well during the economic slowdown, some analysts worry that could change if the labor market seriously weakens in the coming months. That could force consumers to sharply cut back on spending, tipping the economy into recession.
Even with this fear, other economists are hopeful that aggressive rate-cutting by the Fed along with tax-cut refunds will help jolt economic growth later this year.
Tuesday's report also showed that new-housing permits, a good barometer of current demand, rose by 2.1 percent in May to a seasonally adjusted annual rate of 1.62 million.