US single-family housing starts dented by Hurricane Beryl, higher mortgage rates

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Nest Seekers International chief economist Erin Sykes weighs in as high interest rates continue to hurt the housing market on 'The Bottom Line.'

U.S. single-family homebuilding dropped to near a 1-1/2-year low in July due in part to Hurricane Beryl's disruption of activity, but rising new housing supply could limit a rebound.

The fifth straight monthly decline in homebuilding reported by the Commerce Department on Friday suggested the housing market remained depressed at the start of the third quarter. Aside from the weather, the housing market remains constrained by higher mortgage rates and house prices.

«Even though lower interest rates should provide ongoing support to new home sales, the existing oversupply in some regional markets could be a bigger constraint than we previously anticipated,» said Paul Ashworth, chief North America economist at Capital Economics.

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Single-family housing starts, which account for the bulk of homebuilding, tumbled 14.1% to a seasonally adjusted annual rate of 851,000 units last month, the lowest level since March 2023, the Commerce Department's Census Bureau said.

Single-family homebuilding plunged 22.9% in the densely populated South, likely depressed by Beryl, which struck Texas early in the month. Starts also plummeted 27.1% in the Northeast. They slipped 1.4% in the West, but increased 16.8% in the Midwest.

Single-family housing starts dropped 14.8% on a year-on-year basis in July. The housing market has weakened following a spring resurgence in mortgage rates. Residential investment, which includes home building, contracted in the second quarter after rising for three consecutive quarters.

Construction at the Toll Brothers