Single-family housing starts declined by 2.3% in July to the lowest level in three years as homebuilders are finally trying to come to grips with a buildup in inventories of new and existing homes.The U.S. Census Bureau reported that SF starts fell from a record seasonally adjusted annual rate of 1.49 million in June to 1.45 million in July -- the lowest level since May 2003. Since June 2005, SF starts are down 16.6% and permits are down 23.5%. "The decline in housing activity has been a little bit sharper than we anticipated," said Michelle Girard, senior economist at RBS Greenwich Capital. RBSGC economists originally forecast a 10% slowdown in housing starts and sales this year and now it looks like it will be 15% decline. "We have not seen bottom yet," Ms. Girard said. But it could be a "positive sign," she added, noting that -- as a result -- housing activity should stabilize more quickly at around late 2003 and early 2004 levels. Despite the slowdown in starts, mortgage lenders that finance new homes should have a good year due to the high level of homes under construction at the end of last year. "We are headed toward a record year in housing completions," National Association of Home Builders economist Michael Carliner said. And he noted that a slowdown in completions is still six months down the road.

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