New home construction plunged last month to the lowest level since October as the weak demand for housing persists. Housing starts dropped 5 percent from May to a seasonally adjusted annual rate of 549,000 last month, the Commerce Department said. May's figure was revised downward to 578,000.

But there was a bright side in June as building permits, a gauge of future construction activity, rebounded last month by rising 2.1 percent from a month earlier to an annual rate of 586,000 from a revised 574,000 in May.

Overall, construction of new homes and apartments in June fell 5 percent from a month earlier to a seasonally adjusted annual rate of 549,000, the Commerce Department said Tuesday.