US single-family homebuilding falls sharply in July

US single-family homebuilding declined sharply in July, as elevated mortgage rates and a backlog of unsold new homes continued to weigh on the sector. According to data released by the Commerce Department's Census Bureau on Tuesday, single-family housing starts—which make up the largest share of home construction—fell 9.9% last month to a seasonally adjusted annual rate of 808,000 units. On a year-over-year basis, single-family starts were down 15.7%.

Despite the drop in construction, permits for future single-family homes rose 2.5% in July to an annualized rate of 894,000 units, a 1.1% increase compared to the same period last year.

Overall housing starts, which include multifamily structures such as apartments, declined 12.4% to a rate of 1.239 million units. This was below the 1.35 million annualized rate that economists had anticipated. Total residential building permits, however, increased 5.0% to a rate of 1.443 million units, surpassing the 1.37 million forecast.

The residential real estate market remains in a prolonged downturn, with high borrowing costs and limited housing supply continuing to hurt affordability and dampen sales activity. The average contract rate on a 30-year fixed-rate mortgage ticked down to 6.77% in the week ending August 7—the first decline since mid-June—but it remains near its highest level in over a year.

While a recent industry survey showed a slight uptick in builder sentiment, confidence among construction firms remains largely subdued due to economic uncertainty, steep building costs, and the ongoing conflict involving the US and Iran.