Single-family housing starts leveled off in June, dropping by 0.7%, following a 10% decline in May after the expiration of the federal homebuyer tax credit.

The Census Bureau reported Tuesday that single-family housing starts fell to a seasonally adjusted annual rate of 454,000 in June from a 457,000 rate in May.

It was the lowest reading since October.

One bright area of the report was an increase in building permit applications, a sign of future construction activity. They rose 2.1% from a month earlier, to an annual rate of 586,000.

Construction activity rose 3.6% in the South and 3.1% in the West, but fell 8.9% in the Northeast and 11.3% in the Midwest.

"The housing industry remains stuck in a rut, with both sales and construction activity moribund," said Mike Larson, a housing analyst with Weiss Research. "Until we see signs of life in the labor market, we're just not going to see a robust recovery — only more malaise."

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