Data shows that U.S. housing starts — the economic indicator that shows the number of to-be-constructed housing units was started in a given period of time — plunged 12% in June to a nine-month low.
Data also shows that permits — the number of building applications made by builders to construct future housing units — declined for a third straight month.
This is a blow to the U.S. housing market as most areas continue to struggle with a shortage of properties and listings.
In total, housing starts tumbled 12.3% to a seasonally adjusted annual rate of 1.173 million units in June. It’s the biggest drop since November 2016. Building permits dropped 2.2% to a rate of 1.273 million units, also the lowest level since September 2017.
The biggest factor for the slowdown in activity was the rising construction material costs.
In April 2017, the Trump administration imposed anti-subsidy duties on imports of Canadian softwood lumber. Builders report that this action boosted the cost of building (and subsequently the purchase price) of a new single-family home. Other, mitigating factors include a lack of land and a shrinking labour pool.