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US single-family homebuilding declined sharply in July as elevated mortgage rates and a growing inventory of unsold new homes weighed on construction activity. Single-family housing starts fell 9.9% from the previous month to a seasonally adjusted annual rate of 808,000 units, while the segment was down 15.7% from a year earlier. Permits for future single-family construction increased 2.5% during the month. Total housing starts, including multifamily properties, also declined, while overall residential building permits increased. The figures highlight continued pressure on the US housing market, where affordability remains a concern.
US single-family housing starts fell 9.9% in July to a seasonally adjusted annual rate of 808,000 units, as higher mortgage rates and increased inventories of unsold new homes weighed on homebuilding activity, according to data from the Commerce Department's Census Bureau.
Single-family construction, which accounts for most US homebuilding, was also down 15.7% from a year earlier. The decline comes as elevated borrowing costs continue to affect housing affordability and demand.
Despite the fall in starts, permits for future single-family construction rose 2.5% in July to an annual rate of 894,000 units. On a year-on-year basis, single-family permits were up 1.1%.
Total housing starts, including multifamily structures such as apartments, declined 12.4% to an annual rate of 1.239 million units. Economists surveyed by Reuters had expected total housing starts to reach 1.35 million.
Overall residential construction permits, however, increased 5% in July to a rate of 1.443 million units, compared with economists' estimate of 1.37 million.
The US residential real estate market continues to face pressure from high mortgage rates and limited housing affordability. The availability of homes for sale and the cost of financing have remained key factors affecting both sales and construction activity.
The average contract rate for a 30-year fixed-rate mortgage, the most widely used US home loan, edged lower in the week ended August 7 for the first time since mid-June. However, at 6.77%, the rate remained close to its highest level in more than a year, according to the Mortgage Bankers Association.
Builder sentiment showed some improvement during the same period. The National Association of Home Builders reported an unexpected rise in construction industry sentiment, although overall confidence remained subdued amid economic uncertainty, high mortgage rates and elevated construction costs.
Higher building costs have added to the pressure on developers, making new housing more expensive to build at a time when buyers are already facing high borrowing costs.
Source Reuters
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