U.S. housing starts fell 3.6% in June, more or less as expected.

BMO Nesbitt Burns notes that starts are 2.4% greater than a year ago, and remain above the 12-month average. However, both single and multiple starts fell during the month. The more volatile multiple starts were down by 6.7%. The single starts are holding up better, and they remain the driving force behind the housing strength.

BMO says that despite the drop U.S. housing starts remained at high levels in June. And it says that with low mortgage rates and the Fed on the sidelines, the housing sector should continue to grind forward.

RBC Financial Group says that the housing starts report should weigh in as a positive factor, along with some bullish comments on the outlook for the U.S. economy in Federal Reserve chairman Alan Greenpsan’s Senate testimony yesterday, and House testimony today.

RBC says that the housing data and the building permits third straight monthly increase “suggest that in the near-term the U.S. housing market will remain a supportive component of the economic outlook”.

But RBC says “don’t look for a rate hike by the Fed any time soon. As stated in Greenspan’s testimony yesterday ‘with inflation currently contained and with few signs that upward pressures are likely to develop any time soon, we have chosen to maintain that stance pending evidence that the forces inhibiting economic growth are dissipating enough to allow the strong fundamentals to show through more fully’.”

RBC anticipates the first Fed rate hike to come in November.