Housing Starts Disappoint, Analysts Shrug

What happens when there is bad housing news that nobody hears? Is it like the proverbial tree falling in the forest? Does it mean the bad news won't have a negative effect?

New construction of homes dropped by 10 percent in May from the previous month, to a seasonally adjusted 593,000, according to new figures released by the U.S. Commerce Department. The driver is clear: A 17.2 percent drop in single-family home starts after the expiration of the homebuyer tax credit at the end of April. The outlook isn't great, either. Building permits for new homes dropped 5.9 percent.

The data looks bad from almost every angle. The level of new home starts, at 593,000 units, is at its lowest since December 2009, while the rate of decline was the sharpest since March 2009. The drop in single-family home construction is the steepest since January 1991.

But while the figures were worse than most analysts polled by Thomson Reuters had expected, many experts are shrugging them off.