New residential construction fell in July as builders continued to feel the effects of higher interest rates.
Housing starts fell 6.8% from the previous month to a seasonally adjusted annual rate of 1.238 million units, according to the Data from the Census Bureau Data released Friday showed single-family housing starts fell 14.1% to a seasonally adjusted annual rate of 851,000 units.
The data comes at a time when mortgage rates have been on a downward trend in recent weeks but remain relatively high compared to the period immediately after the pandemic began, keeping many buyers and sellers on the sidelines.
Meanwhile, housing inventory is also rising.
“The decline in both housing starts and building permits in July, to their lowest levels since the pandemic era, only partly reflects the temporary impact of Hurricane Beryl,” Paul Ashworth, chief economist at Capital Economics, wrote after the release.
“Thus, while low interest rates should provide continued support for new home sales, the current oversupply in some regional markets may be a greater constraint than we previously anticipated,” the economist added.
Data Friday showed that building permits for single-family homes also fell last month, falling 0.1 percent on the month to a seasonally adjusted annual rate of 938,000. Meanwhile, building permits for multifamily homes were at a seasonally adjusted annual rate of 408,000 in July.
In August, homebuilder confidence hit its lowest level since December, as high interest rates and record home prices continued to dampen demand for new homes.
