By Lucia Mutikani
WASHINGTON, July 17 (Reuters) – U.S. single-family homebuilding fell for a third straight month in June while permits for future construction dropped to the lowest level in 10 months, weighed down by higher mortgage rates and a glut of unsold new homes on the market.
Homebuilding is also being constrained by rising costs for land and materials. Builders and economists said it would take a while for the housing market to experience benefits from a bipartisan housing affordability legislation recently passed by the U.S. Congress, which among other provisions waives or speeds up environmental reviews for construction projects.
The bill became law despite President Donald Trump not signing it, demanding that a separate voting bill be passed.
“The potential uplift to housing starts from streamlining environmental reviews, easing rules on manufactured housing and encouraging zoning reform will take time to filter through,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. “Real residential investment will drag modestly on GDP growth over the coming quarters.”
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. Starts fell in the Northeast, the South and Midwest regions, but rose in the West. 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, the lowest level since August 2025. They fell 0.2% year-on-year in June. There is limited scope for a strong rebound in permits, with the elevated mortgage rates sidelining potential homebuyers.
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.
Though there is a national housing shortage, especially for starter homes, the stock of unsold new homes on the market is back near levels last seen in late 2007 because of a poor spring selling season this year.
“It felt like builders were finally getting a handle on their inventories, but the clunker of a spring selling season set them back again,” said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets. “As a result, while the level of real residential construction activity should level off soon, the extended downturn that has been in place for two years may extend the weakness for another quarter or two.”
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.
Stocks on Wall Street were trading lower amid a tech share rout. The dollar was steady against a basket of currencies. U.S. Treasury yields rose.
IMPORT PRICES RISE IN JUNE
A separate report from the Labor Department on Friday showed an unexpected rise in import prices in June, with the annual increase in imported inflation the largest in nearly four years. That ended this week’s run of favorable inflation readings. Import prices increased 0.3% last month after advancing 1.7% in May, the Labor Department’s Bureau of Labor Statistics said.
In the 12 months through June, import prices surged 7.1%. That was the biggest advance since August 2022 and followed a 6.6% increase in May. The monthly increase in import prices bucked declines in producer and consumer prices in June, which were attributed to the retreat in oil prices as a fragile ceasefire between the U.S. and Iran took hold.
Prices of imported fuel fell 0.4% last month after rising 12.6% in May. They jumped 44.1% year-on-year in June. Imported food prices eased 0.2%. Excluding food and fuels, import prices increased 0.4% after advancing 0.8%. The so-called core imported inflation increased 4.6% in the 12 months through June.
Core imported inflation was boosted by a 0.4% increase in imported capital goods prices, reflecting strong demand for technology products as businesses ramp up investment in artificial intelligence. Prices for imported consumer goods, excluding automotives, rose 0.3%. The cost of imported automotive vehicles, parts and engines eased 0.1%.
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Nick Zieminski)
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