WASHINGTON (AP) — The pace of United States (US) home construction fell a sharp four per cent in July despite strong demand from would-be buyers, held back by a shortage of skilled labour and affordable land.
The Commerce Department said on Friday that housing starts slipped last month to a seasonally adjusted annual rate of 1.19 million units.
So far this year, housing starts have declined 3.1 per cent. Though there was a slight 1.3 per cent uptick in the construction of single-family homes last month, the gain was offset by a 17.2 per cent plunge in the apartment category.
The construction slowdown, which has persisted all year, is thwarting prospective homebuyers. The solid job market and falling mortgage rates have boosted interest among people seeking homes, yet the shortage of available homes and rising prices have dampened sales.
The slowdown in construction, which in turn contributes to the scarcity of available housing, may contribute to a weakening of the overall economy.
Corporate Economist at the Navy Federal Credit Union Robert Frick said that July’s report showed that low mortgage rates were not enough to pull the US homebuilding market out of its slump.
The average rate on a 30-year fixed mortgage is just 3.6 per cent, according to Freddie Mac, its lowest level since November 2016.