WASHINGTON, July 17 (Reuters) – U.S. single-family homebuilding and permits for future construction fell in June, weighed down by higher mortgage rates and inventory of unsold new homes on the market.
Single-family housing starts, which account for the bulk of homebuilding, slipped 0.2% to a seasonally adjusted annual rate of 895,000 units, the Commerce Department’s Census Bureau said on Friday. Single-family homebuilding dropped 3.2% year-on-year in June. Permits for future construction of single-family homes dropped 2.4% last month to a rate of 871,000 units. They fell 0.2% year-on-year in June.
The rate on the popular 30-year fixed-mortgage has increased by nearly 60 basis points since the U.S. and Israel attacked Iran at the end of February, hitting an 11-month high of 6.55% this week, data from mortgage finance agency Freddie Mac showed. A National Association of Home Builders survey on Thursday showed sentiment among single-family homebuilders remained depressed in July, with economic uncertainty amid the Middle East conflict, rising material prices, high land costs and elevated mortgage rates blamed.
Though there is a national housing shortage, especially for starter homes, the stock of unsold new homes on the market is near levels last seen in late 2007, when the housing market was collapsing. Builders welcomed a bipartisan housing affordability legislation recently passed by the U.S. Congress, which includes measures to restrict single-family homeownership by investment firms and to waive or speed up environmental reviews for construction projects, but they said the provisions would take some time to be implemented.
The bill became law despite President Donald Trump not signing it, demanding that a separate voting bill be passed.
Starts for housing projects with 5 units or more, a very volatile segment, soared 76.3% to a rate of 513,000 units in June. Multi-family housing starts increased 19.3% year-on-year. Overall housing starts jumped 19.0% to a pace of 1.427 million units. They increased 3.5% year-on-year in June.
Building permits for multi-family housing projects dropped 4.9% to a rate of 445,000 units last month. Overall building permits fell 3.0% to a rate of 1.367 million units. They declined 2.3% year-on-year in June.
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)
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