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imageWASHINGTON: New US home construction fell sharply in June, and building permits also dropped, official data showed Thursday in a report signaling persistent weakness in the housing market.

Housing starts dived 9.3 percent in June, to an annual rate of 893,000 units, their lowest level since September, the Commerce Department said.

Building permits, a forward-looking indicator of housing construction, fell 4.2 percent to a rate of 963,000 units.

The department revised down its May number on housing starts to 985,000 from 1,001,000.

Analysts had expected starts would climb in June, with an average estimate of 1,020,000 units.

New construction of single-family homes, the largest part of the housing market, fell 9.0 percent from May. Multi-family starts also fell.

Year-over-year, housing starts were up 7.5 percent and permits were up 2.7 percent.

"All the hit is in the south, where starts plunged by 29.6 percent, the biggest-ever monthly drop, despite gains in each other region," said Ian Shepherdson of Pantheon Macroeconomics.

"The trend is flat-to-upwards, though, so we expect a rebound in July."

Barclays analyst Dean Maki highlighted that housing starts rose an annualized 26.2 percent in the first quarter after plunging in the first quarter due to severe weather conditions.

"Residential investment is still likely to make a positive contribution to Q2 14 real GDP growth, despite the weakness in June," Maki said in a research note.

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