The once-booming US housing market has come down with the chills.
Construction starts fell in July to the slowest pace since early 2021 as single-family homebuilding tumbled, according to government data released yesterday.
Meanwhile, cancelled deals rose as buyers continued to back away from the market amid rising mortgage rates, a study by Redfin Corp said.
After a pandemic-related housing boom forced builders to scramble to make enough homes to satisfy demand, high mortgage rates, elevated inflation and a deteriorating economy are now tempering sales.
That’s left builders with a sizable number of unsold properties.
The outlook continues to deteriorate. A report on Monday showed homebuilder sentiment slid for an eighth straight month in August, marking the worst stretch since 2007. While Home Depot Inc reported better-than-expected earnings last quarter, it said customer transactions continue to fall.
Residential starts dropped by nearly 10pc last month to a 1.45 million annualised rate from a revised 1.6 million pace in June. Applications to build, a proxy for future construction, declined 1.3pc to 1.67 million.
Prices for commodities like timber have eased in recent months, though builders continue to struggle to fill open positions.
More housing deals are also starting to fall through.
Roughly 63,000 agreements to purchase homes were cancelled in July, equal to about 16pc of properties that went into contract that month, according to Redfin.
The government’s report showed single-family housing starts decreased 10.1pc to an annualised 916,000 rate, the slowest since June 2020. Permits for one-family dwellings fell 4.3pc to a two-year low.
Meanwhile, construction of multi-family dwellings fell to 530,000 in July.