Official figures from the US show that housing starts slid 3.3% in May to the slowest pace in 17 years. This brought the annual drop to 32%, according to the Commerce Department.
May housing starts represented a seasonally adjusted annualised rate of 975,000 units, the Commerce Department said, slightly below the consensus analyst forecast of 980,000 units. That was the lowest level since 921,000 in March 1991.
Construction permits, an indicator of future activity in the housing sector, slipped 1.3% from April to a rate of 969,000 units and were 36.3% below the May 2007 level.
The May declines marked a return to a downward trend after a surprisingly strong jump in homebuilding in April. The Commerce Department also revised downward its initial estimate of April housing starts to 1.008 million units, from 1.032 million.
Separate figures showed that a leap in energy costs pushed up US wholesale prices 1.4% in May, though a closely watched 'core' inflation rate remained cooler.
The Labor Department's producer price index, a measure of wholesale inflation, showed a similar trend to consumer inflation released last week. The core rate, which excludes volatile energy and food components, rose a modest 0.2% in the month.
The headline PPI was higher than Wall Street expectations of a 1% rise while the core rate was in line with forecasts. Energy costs shot up 4.9%, led by a 9.3% surge in petrol and a jump of 11.2% in diesel fuel prices. Food prices jumped 0.8% in the month, led by an 8% rise in pork costs.
