Surprise dip in US home building

The fall in new home building ends three months of rises

Construction of new US homes posted a surprise fall in July, ending three straight months of increases, Commerce Department figures have shown.

Suggesting the housing market recovery remains weak, the number of new properties built last month fell 1% to an annual rate of 581,000 properties.

Separate official figures showed that US wholesale prices recorded an unexpectedly large fall last month.

Prices declined 0.9% from June, and by 6.8% when compared with July last year.

The big fall from a year earlier was the largest in more than six decades of record keeping by the Labor Department, but came as oil prices fell from an all-time high of £147 a barrel last July to the current levels between $65 and $70.

The housing starts were a bit disappointing, but the inflation number came in better than expected John Spinello of Jefferies & Co

Core wholesale prices - which pull out the volatile cost of energy and food - were down 0.1% in July from June.

The fall in the construction of new home was led by apartments, which fell at an annual rate of 13%.

Analysts said continuing job loss fears were putting people off buying a new home, while others still simply cannot afford to get the loans they needed to join the housing market.

The most recent official figures showed that the US jobless rate rose to 9.5% in June, a 26-year high.

The Federal Reserve has predicted that the rate could rise as high as 10.1% before unemployment starts to fall back again.

"The housing starts were a bit disappointing, but the inflation number came in better than expected... I think we are going to be in consolidation mode," said analyst John Spinello of Jefferies and Company.

Home Depot sales

The official construction figures came as DIY firm Home Depot reported a slight dip in quarterly profits.

The company's net profit fell to $1.1bn (£666m) in the three months to 2 August, its fiscal second quarter, down from $1.2bn a year earlier.

While its overall sales declined 9.1% to $19.1bn, Home Depot said those in California and north eastern America were up, adding that it was further helped by continuing cost cutting work.

Home Depot now expects to see profits rise slightly for the current financial year.