The construction of new U.S. homes fell to a 16-month low in July, according to the Census Bureau and the Department of Housing and Urban Development (HUD) on Aug. 16. Factors likely influencing the result are Hurricane Beryl, an oversupply of new houses and high mortgage rates and home prices.
The fifth consecutive monthly decrease could cause the housing market to remain quiet at the start of the third quarter, with a slowing labor market also factoring in.
“We expect housing starts and building permits to increase as we approach an official Fed interest rate cut,” said Dr. Selma Hepp, CoreLogic chief economist. “This prolonged high-interest-rate period has also negatively impacted recent homebuilder confidence. These negative sentiments are already improving through August’s early indicators and should see a slight boost month on month going into 2025.”
Single-family housing starts, which account for the bulk of homebuilding, fell 4.1% to a seasonally adjusted annual rate of 851,000 units last month, the lowest level since March 2023.
Homebuilding was down 22.9% in the South, likely due to Hurricane Beryl. Starts also plunged 27.1% in the Northeast, while falling 1.4% in the West. The Midwest saw an increase of 16.8%.
