WASHINGTON, Aug. 16 (Xinhua) -- Government data released Tuesday showed that U.S. housing starts in July plunged by 9.6 percent, indicating a cooling housing market amid rising rates and elevated inflation.
Housing starts declined to a seasonally adjusted annual rate of 1.446 million in July, which is 8.1 percent below the July 2021 rate of 1.573 million, according to a report released by the U.S. Census Bureau, part of the Commerce Department.
The latest data marks the weakest pace since early 2021.
Single-family starts, in particular, slumped 10.1 percent and are down 2.1 percent on a year-to-date basis. This is the lowest reading for single-family home building since June 2020.
"Housing demand continues to weaken on higher interest rates while on the supply side builders continue to grapple with higher construction costs," Jerry Konter, chairman of the National Association of Home Builders (NAHB), said in a statement
"Builders are reporting weakening traffic as housing affordability declines," said Konter.
In May, housing starts plunged by 13.5 percent to reach an annual rate of 1.562 million. In June, the figure rebounded slightly to 1.599 million.
Builder confidence in the market for newly built single-family homes fell 6 points in August to 49, marking the first time since May 2020 that the index fell below the key break-even measure of 50, according to the NAHB/Wells Fargo Housing Market Index released Monday.
"Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession," said NAHB Chief Economist Robert Dietz.
"However, as signs grow that the rate of inflation is near peaking, long-term interest rates have stabilized, which will provide some stability for the demand-side of the market in the coming months," Dietz said.
