Home building in the U.S. declined in June, a fresh sign of weakness in the housing market.
Housing starts, a measure of new-home construction, fell 0.9% in June from the prior month to a seasonally adjusted annual rate of 1.253 million, the Commerce Department said Wednesday.
Residential building permits, which can signal how much construction is in the pipeline, dropped 6.1% from May to an annual pace of 1.220 million. That was the biggest monthly drop since March 2016.
“Lower mortgage rates are not spurring the home building industry to increase construction, as lack of skilled workers, cheaper material costs and land zoned for building continue to hamstring production,” said Robert Frick, corporate economist at Navy Federal Credit Union, in a note to clients.
Building permits slump
Economists surveyed by The Wall Street Journal had expected a 0.7% decrease for starts and a 0.3% decrease for permits.
Housing-starts data are volatile from month to month and can be subject to large revisions. June’s 0.9% decline for starts came with a margin of error of 7.9 percentage points.
Starts were up 6.2% from June last year. Building permits were down 6.6% from June 2018.
The overall housing sector has struggled with high prices and low inventory, even with a strong labor market, low borrowing costs and rising incomes.
The average rate on a 30-year, fixed-rate mortgage eased further in June to 3.73% in the final week of the month, according to Freddie Mac, the lowest rate since late 2016.
Cooling mortgage rates in recent months could be nudging the housing market toward a modest spring performance. Sales of previously owned homes rose 2.5% in May from the prior month, the National Association of Realtors said last month.
Source: Housing Trends Feed