Homebuilders pulled back on building and plans to build homes in July, threatening to worsen home affordability in the U.S.
The pace of breaking ground on new projects fell 6.8 percent to a seasonally adjusted annual rate of 1,238,000, the Census Bureau said Friday. Economists had forecast a pace of 1.342 million.
Single-family housing starts in July fell 14.1 percent to an annual rate of 851,000.
Authorization for building permits, a forward-looking indicator of future construction, fell four percent to 1,369,000. Single-family permits fell 0.1 percent to 938,000.
Although new homes make up a small fraction of the housing market, homebuilding is an economically significant activity. It employs workers in a wide variety of skill levels and is correlated with broader economic activity. Besides the direct demand for labor and materials, newly built homes are often outfitted with new appliances, new furniture, and other consumer durable goods.