Time is running out to make a gift to Marketplace and help us meet our fall fundraiser goal of 2,000 donations by midnight Friday.
Construction on new single-family homes, or housing starts, fell about 10% in July.
Month to month, this data can be pretty volatile. But this is the third month in a row that new construction has slowed.
The slowdown in new home construction is another sign that the housing market is cooling.
With home prices and mortgage rates both high, “housing affordability has plunged to the lowest levels that we’ve seen since the late 1980s,” said Gregory Daco, chief economist at EY-Parthenon. “That has led to a pullback in homebuying activity. And, with a bit of a lag, we’re starting to see homebuilding activity starting to fade.”
Fewer people are willing to commit to buying a new home that’s still under construction, said Lawrence Yun at the National Association of Realtors.
“Builders are becoming very cautious, because they are seeing rising inventory.”
In the short term, Daniel McCue at Harvard’s Joint Center for Housing Studies said this could be a good thing for some buyers, “because builders will have to lower prices in the face of this declining demand.”
But long term, he said if there’s not a significant increase in the number of homes being built, home prices, which are now at record highs, will just keep rising.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.