U.S Housing Declines In June To Lowest Level In Nine Months.

The number of new homes being built in the United States fell to a nine-month low in June, and permits for new construction projects also decline. This is the most recent sign of a cooling housing market as rising mortgage rates make homes less affordable.

The Commerce Department recently said that housing starts dropped by 2 percent last month to a seasonally adjusted annual rate of 1.559 million units, the lowest level since September 2021. The rate for May's data was increased from the previously reported 1.549 million units to 1.591 million units.

Future home construction permits decreased by 0.6% to 1.685 million units.The housing market is particularly sensitive to interest rates, and this year has seen a notable softening as a result of the Federal Reserve's aggressive rate hikes to combat inflation, which is at its highest level in forty years. When compared to the beginning of the year, the average contract rate for a 30-year fixed-rate mortgage increased from approximately 3.3 percent to over 6 percent in June, making home purchases unaffordable for an increasing number of potential buyers, especially first-time buyers. 

The Fed is expected to raise interest rates again at its meeting next week and will continue to do so until the end of the year, so while it is unclear how much higher mortgage rates will rise, it is almost guaranteed that they will stay high for some time. The National Association of Home Builders/Wells Fargo Housing Market Index experienced its second-largest decline ever in July, according to a study released on Monday, with a measure of prospective buyer traffic falling below the break-even level of 50 for a second consecutive month.