Housing starts hit their lowest level in eight months in June, further evidence the economy lost momentum in the second quarter, but a rise in permits offered hope of a pick up in homebuilding.


The Commerce Department said yesterday that housing starts dropped 5.0 percent to a seasonally adjusted annual rate of 549,000 units, the lowest since October. It was the second straight month of declines in groundbreaking activity and was well below market expectations for a 580,000-unit rate.


The data was the latest in a series of indicators to imply the United States' recovery from its longest and deepest recession since the 1930s took a step back in the second quarter, much earlier than economists had initially anticipated.


“Housing is one of the areas of the economy that has helped deliver V-shaped recoveries in the past and with housing continuing to languish at very low levels, the V-shaped recovery is basically off the table,” said Zach Pandl, an economist at Nomura Securities International in New York.