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Housing Starts Rise at Fastest Pace in Three Years

Groundbreaking on new U.S. homes rose in June to its fastest pace in over three years, lending a helping hand to an economy that has shown worrisome signs of cooling.

The Commerce Department said on Wednesday that housing starts rose 6.9 percent last month to a seasonally adjusted annual rate of 760,000 units. That was the highest rate since October 2008.

The reading, which is prone to significant revisions, was above the median forecast in a Reuters poll of a 745,000-unit rate.

The U.S. housing market, which collapsed six years ago, has been a relative bright spot in the economy this year, although it remains hobbled by a glut of unsold homes.

Federal Reserve Chairman Ben Bernanke said on Tuesday the sector has shown modest improvement.

On Wednesday, the Mortgage Bankers Association said applications for loans to buy homes jumped last week as the interest rate on 30-year mortgages fell to a record low. In recent weeks, other private groups have said signed contracts for home purchases rose sharply in May and home prices rose that month.

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