United States single-family homebuilding fell sharply in July to its lowest level in more than three-and-a-half years, while contract signings for existing homes also declined, signalling continued pressure on the housing market from elevated mortgage rates and economic uncertainty linked to the Iran war.
Single-family housing starts, which account for most homebuilding activity, fell 9.9% in July to a seasonally adjusted annual rate of 808,000 units, the Commerce Department's Census Bureau said on Tuesday. The figure was the lowest since November 2022.
Single-family homebuilding declined 15.7% from a year earlier.
Permits for future single-family construction, a gauge of upcoming building activity, rose 2.5% last month to an annualised rate of 894,000 units.
Permits were up 1.1% year-on-year in July, marking only the second annual increase in the past two years, although issuance remained near its lowest level in three years.
Total housing starts, including multifamily buildings such as apartments, dropped 12.4% to an annual rate of 1.239 million units in July. Economists had expected a rate of 1.35 million.
Overall residential construction permits rose 5.0% to an annual rate of 1.443 million units, above economists' estimate of 1.37 million.
Contract signings for existing homes, which typically translate into completed sales within one or two months, also declined in July, according to the National Association of Realtors. Pending home sales fell 2.3% from the previous month to their lowest level since January.
The U.S. housing market remains under significant pressure, with high mortgage rates and limited housing supply weighing on affordability and sales.
“The highest mortgage rates of the year hit right in the middle of summer, and that's pulling back contract signings,” NAR Chief Economist Lawrence Yun said in a statement.
“Home prices are at record highs so houses for sale are sitting on the market longer, and fewer buyers are bidding above the asking price than a year ago, though there are large local market variations.”
The National Association of Home Builders reported an unexpected improvement in builder sentiment on Monday, although confidence remains subdued amid economic uncertainty, elevated mortgage rates and high construction costs exacerbated by the U.S.-led war with Iran.
