INSTANT VIEW: Housing starts rise because of rule change

NEW YORK (Reuters) - Home building projects started in June surprisingly rose 9.1 percent due chiefly to a change in New York City building codes that, if it were ignored, would have seen starts decrease by 4.0 percent, a government report said on Thursday.

New York City enacted a new set of construction codes effective July 1, that largely explained an 11.6 percent increase in building permits and the starts number, the government said.

Excluding multifamily data in the Northeast, the government said, there was a 0.7 percent increase in permits and a 4.0 percent decrease in housing starts in June.

The number of U.S. workers filing new claims for jobless benefits rose by a less-than-expected 18,000 last week to 366,000 on a seasonally adjusted basis, a Labor Department report showed on Thursday.

The four-week average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, fell to 376,500 from 381,000 the week before. It was the second consecutive weekly drop in that measure.

The number of people remaining on benefit rolls after drawing an initial week of aid fell to 3.12 million in the week ended July 5 - the most recent data available - which was less than the 3.20 million that analysts expected.

Still, it was the 12th straight week that these continued claims were above 3 million, a sign the slow U.S. economy has made it harder for workers to find jobs.

COMMENTS:

ROBERT MACINTOSH, CHIEF ECONOMIST, EATON VANCE CORP,

BOSTON:

HOUSING STARTS: "It seems absurd given everything else we know about real estate... Excluding the Northeast, starts would have dropped 4 percent. You take that out, and you're probably where you thought you'd be, down 4 percent. It's so absurd, it can't make sense.

JOBLESS CLAIMS: "We're talking pretty weak economy here. You need to look at the 4-week moving average, and that's been hovering around this 380,000 level. Text books will tell you that's commensurate with very weak, but still positive GDP. Exactly the kind of number that we've been getting, less than 1 percent but not negative type of GDP growth.

"Until that number gets above 400,000, I think we're pretty clearly feel we're not in a recession. It may feel it for certain people in certain industries, but the country as a whole, we're not there. This is saying exactly what you'd expect. This number makes a lot of sense to me.

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ECONOMY.COM,

WESTCHESTER, PENNSYLVANIA:

HOUSING STARTS/PERMITS: "This is a short-lived bounce in construction, There are just too much unsold inventories for builders to maintain any uptick in construction for long. There is no chance construction can stay over a million units for very long. If there isn't less construction. we could see prices fall further. The market will either clear by lower prices or lower construction, most probably both. This thing will fade."