Housing starts plunged 14.4% to a seasonally adjusted annual rate of 1.549 million units last month, the lowest level since April 2021, the Commerce Department said on Thursday. Data for April was revised higher to a rate of 1.810 million units from the previously reported 1.724 million units.
Economists polled by Reuters had forecast starts would slide to a rate of 1.701 million units. Permits for future homebuilding declined 7.0% to a rate of 1.695 million units.
The housing market is very sensitive to interest rates. Sales have been trending lower over the last few months, with homebuilding mostly moving sideways.
A survey on Wednesday showed the National Association of Home Builders/Wells Fargo Housing Market sentiment index hit a two-year low in June, with a gauge of prospective buyer traffic falling below the break-even level of 50 for the first time since June 2020.