Housing construction in US declines 7% in July

The US housing construction dropped sharply by 7% in July as builders struggled to cope with various factors for the decline. It was the lowest pace since April, but 2.55 higher than the previous year. On Wednesday, the Department of Commerce told the media that the downfall in July had put construction at an adjusted annual rate of 1.53 million units. The application for building permits rose by 2.6% in July from June to an annual rate of 1.64 million units. Since March, it was the first monthly increase in permit applications. In July, construction fell by 4.9% for single-family homes, with an annual rate of 1.11 million units. The construction in apartments of five or more declined by 13.6% to an annual rate of 0.412 million units. The rate of housing construction dropped in every part of the country except in the South, where it rose by 2.1%. The Northeast part faced the biggest decline by 49.3%, the West with a drop of 11.35%, and the Midwest with 6.9%. A survey of the builders' confidence said that the expectations dropped sharply in August to the lowest in a year. Builders struggled with high prices, supply shortages and increasing prices of the homes. In the National Association of Home Builders or the Wells Fargo survey, the expectations dropped by five points to the reading of 75. While the housing demand was insane in the past, economists believe that strong demand will continue to drive the industry. The lead US economist at Oxford Economics, Oren Klachkin, said that the housing demand and sparse inventory would give strong reasons to the builders to maintain the solid level of construction. However, high prices of materials, shortage of workers and limited availability of land will control the construction activity, he added. On Wednesday, the Mortgage Bankers Association told the media that the application of mortgages dropped by 3.95 to its lowest level in a month, reflecting the fall in refinancing applications as the interest rates of mortgage rose. Image Source Also read: New Delhi residential prices drop 0.2% YoY: Knight Frank report