U.S. Single-Family Homebuilding Hits Eight-Month Low Amid Rising Mortgage Rates

U.S. single-family homebuilding plummeted to an eight-month low in June, largely driven by soaring mortgage rates that have negatively affected the housing market and likely dampened economic growth in the second quarter.

A report from the Commerce Department on Wednesday also indicated that permits for future construction of single-family homes hit a one-year low last month. This signals that any expected uptick in activity, even if the Federal Reserve cuts interest rates in September, might be subdued.

Christopher Rupkey, chief economist at FWDBONDS, stated, "The country is not building enough single-family homes to alleviate the shortage of affordable housing." The average rate on a 30-year fixed mortgage rose above 7% in April but has since decreased to 6.89% last week. Despite this, homebuilder confidence remains low, and future construction permits slipped 2.3% to their lowest since May 2023.

(With inputs from agencies.)