Housing starts fell in May further dampening the outlook for the general economy. New home construction declined by 2.1 percent versus the prior month, according to statistics released by the Commerce Department, and building permits rose 3 percent. The news came as mortgage rates climbed to their highest levels in nearly a year. Economists have noted that the overall economy is beginning to feel the effects of the housing market slump. In California, however, the signals have been less clear, according to the just-released UCLA Anderson Forecast. Job growth has remained relatively stable in the state and unemployment has remained low, the report noted. However, the report noted that it may be some time before the housing market recovers in California. “Our forecast looks for sluggish economic growth in California through late 2008 and a continuation of the flat-to-slightly-falling prices and weak sales in the housing market through the entire forecast period,” said Ryan Ratcliff, economist and author of the UCLA Forecast for California.