U.S. housing starts and building permits unexpectedly fell in June, suggesting the housing market recovery was struggling to get back on track after stalling in late 2013.
Groundbreaking declined 9.3 percent to a seasonally adjusted annual 893,000 million unit-pace, the lowest since September, the Commerce Department said on Thursday. April's starts were revised to show a steeper 7.3 percent fall instead of the previously reported 6.5 percent drop.
Economists polled by Reuters had forecast starts rising to a 1.02 million-unit rate last month.
Housing has been constrained by higher mortgage rates. A shortage of properties for sale has pushed up prices, reducing affordability for many.
But there are glimmers of hope for the sector. A survey on Wednesday showed confidence among single-family home builders hit a six-month high in July, amid optimism over sales over the next six months.
Groundbreaking for single-family homes, the largest part of the market, tumbled 9.0 percent in June to a 575,000-unit pace, the lowest since November 2012. Single-family starts in the South dropped to their lowest level in two years.
Starts for the volatile multi-family homes segment dropped 9.9 percent to a 318,000-unit rate.
Permits fell 4.2 percent to a 963,000-unit pace in June. Economists had expected them to rise to a 1.04-million unit pace. With permits now leading starts, groundbreaking could pick up in the months ahead.
Permits for single-family homes increased 2.6 percent to a 631,000 unit-pace, the highest level since November. Permits for multi-family housing tumbled 14.9 percent to a 332,000-unit pace. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)