Ahead of the Bell: Housing Starts

The Commerce Department report, due Tuesday at 8:30 a.m. EDT, is expected to show construction of new homes and apartments fell to an annual rate of 985,000 units in May, according to the consensus estimate of Wall Street economists surveyed by Thomson/IFR.

If the forecast is correct, it would be a drop of 4.7 percent from a rate of 1.03 million units a month earlier. April's construction figures were up 8.2 percent from the prior month, but that strength came entirely from apartment construction, which can be volatile from month to month.

Applications for building permits, considered a reliable sign of future activity, are projected to fall to an annual rate of 960,000 units, down 1.8 percent from a rate of 978,000 units in April, according to Thomson/IFR.

More dour housing news came Monday, as the National Association of Home Builders' housing market index tied a record low.

The May index, which tracks builders' sentiment about market conditions, came in at 18, the same level as in December, when the monthly survey of homebuilders hit its record low.

Tighter lending standards, rising foreclosures and fear about the housing market's future have sidelined buyers, an absence felt acutely by homebuilders such as D.R. Horton Inc., Pulte Homes Inc. and Centex Corp.