WASHINGTON -- Starts in new-home construction dropped 2.5% in July, according to figures released by the Commerce Department on Aug. 16. Housing starts declined to a seasonally adjusted annual rate of 1.795 million units, 13.3% below the peak pace of a year ago.

"We expect the downswing in starts and permits to continue for several months, although solid economic fundamentals, a favorable financing environment and widespread use of sales incentives will limit the degree of decline," said National Association of Home Builders Chief Economist David Seiders. "We are currently projecting a 9.4% decline in total housing starts for 2006, with single-family starts off by 10.8% from the record level in 2005." Read more.

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