Builders started fewer houses in July and pulled permits for even fewer, the Commerce Department reported Tuesday. The data was roughly in line with Wall Street expected.

Starts in July dropped 1.5% from June to a seasonally adjusted annual rate of 604,000, 9.8% above the pace of a year earlier. The original June estimate was downwardly revised from a rate of 629,000 to 613,000.

Single-family starts fell 4.9% to an annual rate of 425,000, 0.9% off the pace of July, 2010.

Not seasonally adjusted, builders started 56,300 homes in July, 40,200 of them single family. That was down from 60,100 overall and 44,600 in the prior month.

The data was mixed regionally. The usually volatile Northeast was up 34.7% to a rate of 97,000 in total starts and up 7.5% to 43,000 for single-family, up 27.6% but down 15.7% respectively. Starts in the Midwest plunged 37.7% to a rate of 76,000 overall and 22.6% to 65,000 for single family, down 17.4% and 14.5% respectively from the pace at the same time last year. The South was up 5.6% in total starts to 303,000 but down 4.2% in single-family to 226,000, up 10.2% and 0.4% respectively year-over-year. The West was down 3% overall to a pace of 128,000, which was 19.6% ahead of last July, and up 4.6% in single-family to 91,000, up 18.2% from July, 2010.

Permits dropped 3.2% to a seasonally adjusted annual rate of 597,000, a 3.8% increase from the level of July 2010. Single-family authorizations rose 0.5% to a rate of 404,000, 1.2% below the pace at the same time last year.

The permit data also was mixed regionally. Total permits in the Norteast fell 18.3% to a rate of 58,000, but single-family permits were up 2.9% to 36,000. These represented drops of 7.9% and 16.3% from the pace last July, respectively. The total in the Midwest fell 7.1% to 92,000, with single-family flat at 68,000. These were year-over-year declines of 9.8% and 4.2% respectively.

Total permits in the South rose 3.6% to 317,000, 6.7% ahead of last year's pace, but single-family permits fell 1.4% to 214,000, still 0.5% above last July. The West fell 7.8% overall to 130,000 but was up 4.9% in single-family to 86,000. These were year-over-year gains of 15% and 4.9%, respectively.

Michael Rehaut, home-building analyst at J.P. Morgan, said in a note to investors that the data met his expectations. "Despite the recent significant amount of market stress and macro uncertainty over the last two weeks, we continue to believe that housing demand effectively remains near its cyclical trough and is unlikely to retest its 4Q08/1Q09 lows, absent another material recession," he wrote. "Moreover, we believe supply continues to remain manageable, as existing homes for sale are 19% below peak levels and foreclosures continue to liquidate at a moderate pace."

Adam Rudiger at Wells Fargo, who noted that the overall numbers slightly beat the street forecast, was less upbeat. "Single-family construction (more important to the public homebuilders) was weak, however, despite an easier comparison as July 2010 starts had no positive impact from the federal homebuyer tax credit," he wrote. "Over the last 10 years, actual single family starts in January through July have represented an average of 61% of the year's total SF starts. Based on year-to-date results, this would imply 413,000 single-family starts in 2011, down 12.3% yr/yr, which would be the lowest level on record (since 1959)."