Homebuilders backed away from new homebuilding and construction plans in July, threatening to worsen home affordability in the United States.
The Census Bureau said Friday that the pace of new project starts fell 6.8% to a seasonally adjusted annual rate of 1.238 million. Economists had been expecting a pace of 1.342 million.
The number of single-family home construction starts in July was 851,000, down 14.1% from the previous year.
Building permits, a proxy for future construction, fell 4% to 1.369 million. Permits for single-family homes fell 0.1% to 938,000.
Although new homes represent only a small portion of the housing market, home construction is an economically important activity. Home construction employs workers at a variety of skill levels and is correlated with broader economic activity. In addition to the direct demand for labor and materials, new homes are often outfitted with new appliances, new furniture, and other consumer durables.
