WASHINGTON (AFP) - US home construction saw a surprise decline in July, with both new starts and building permits suffering a drop after rising for two months, the Commerce Department said Tuesday. Privately-owned housing starts fell at a seasonally adjusted annual rate of 1.0 percent to 581,000 from the revised June estimate of 587,000, the department said. Building permits to construct privately-owned homes fell to a seasonally adjusted annual rate of 560,000, 1.8 percent below the revised June rate of 570,000. Analysts had expected 599,000 new starts and 577,000 building permits in July. Meanwhile, falling energy prices drove US wholesale prices down by a sharper than expected 0.9 percent in July, the Labor Department reported Tuesday. Most analysts had expected the producer price index (PPI) to dip 0.3pc, after a leap of 1.8 percent in June due to surging oil prices. The downturn in finished goods prices was broad-based, the department said, as inflation pressures remain weak amid the prolonged recession. Energy prices dropped 2.4 percent after jumping 6.6 percent in June. Food prices fell 1.5 percent following a 1.1 percent advance in June. The so-called core PPI index, excluding energy and food prices, which can serve as a better long-term indicator of inflation, slipped 0.1 percent in July after a 0.5pc increase in June. On an annual basis, the decline in all wholesale prices picked up steam in July, falling 6.8 percent following a 4.6 percent decline in June. The department said that prices of crude goods dropped 7.4 percent in July after a surge of 15.4pc in June. Intermediate goods prices fell 0.2 percent after climbing 1.9pc in June.