TREASURIES-Bonds lower after housing starts data

NEW YORK May 19 (Reuters) - U.S. Treasury debt prices briefly lost more ground on Tuesday after data showing a drop in housing starts and building permits.

Weak construction numbers are normally positive for bonds, but traders seemed to be thinking, at least initially, that this could mean a draw down in the excess supply of housing that would be a positive for the economy.

Benchmark 10-year notes US10YT=RR were off 4/32 and yielding 3.25 percent, up two basis points.

(Reporting by Pedro Nicolaci da Costa, Editing by Chizu Nomiyama)