Single-family home construction in the U.S. dropped sharply in June, hitting its lowest level in nearly a year, according to data released Thursday by the U.S. Census Bureau. The decline reflects growing pressure from high mortgage rates, rising costs, and lingering economic uncertainty.
Single-family housing starts fell by 4.6% to a seasonally adjusted annual rate of 883,000 units, the weakest level since July 2024, while building permits for future home construction dropped 3.7% to 866,000 units — the lowest since March 2023. These figures are seen as a strong indicator of a cooling residential construction sector.
“The housing market is clearly struggling to regain momentum,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. “High borrowing costs and a growing backlog of unsold homes are forcing builders to pull back.”
Despite the decline in single-family construction, overall housing starts — which include multi-family units — actually rose 4.6% to a 1.32 million annualized rate, suggesting some strength in apartment building. But economists say the surge in multi-family is not enough to offset the drag in single-family activity.
The latest data was first reported by Reuters, citing the U.S. Commerce Department’s monthly housing report.
What’s Causing the Slowdown?
- Mortgage rates remain elevated, hovering near 7% for a 30-year fixed loan, according to Freddie Mac.
- Builders face persistent labor shortages and rising material costs, partly fueled by new tariffs under the Trump administration’s second-term trade strategy.
- There is also a growing inventory of completed but unsold homes, the highest since 2007, pushing some developers to cut prices and offer incentives to buyers.
“Builders are now offering the biggest discounts since the pandemic,” noted Lawrence Yun, chief economist at the National Association of Realtors. “The market is stuck between high costs and weakening demand.”
Regional Impact
According to the Census Bureau breakdown:
- The South and West saw the steepest declines in new permits.
- The Northeast was the only region to post a modest gain in June.
What’s Next?
With inflation still sticky and the Federal Reserve holding off on rate cuts, most analysts expect residential investment to remain sluggish through Q3. “We’re not going to see a significant recovery in single-family construction until borrowing costs ease,” said Robert Dietz, chief economist at the National Association of Home Builders.
The housing sector, which makes up about 15% of the U.S. economy, could be a drag on GDP growth if the downturn continues into the fall.
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