(NewsNation) — New home construction dropped to its lowest level since the pandemic as builders are cutting back due to low demand.
Government figures released Friday show that new housing starts decreased 6.8% to a 1.2 million annualized rate last month, which is the biggest decline in single-family units since April 2020.
These drops were most significant in the West and South, which dropped to the lowest level since May 2020.
The elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have discouraged home shoppers, extending the nation’s housing slump into its third year, including with new builds.
After jumping to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has mostly hovered around 7% this year — more than double what it was just three years ago.
Confidence among home builders slipped for the fourth straight month to its lowest point of the year in August.
Builders have scaled back on new construction leading to an increase of existing inventory, which sits at its highest levels since 2008, reported Bloomberg.
The construction industry is hoping the Federal Reserve will start cutting interest rates soon to help spur new builds again. That may come as soon as next month, the outlet reported.
In an effort to jump-start the industry, Vice President Kamala Harris plans to call for the construction of 3 million new housing units and outline new tax incentives for builders that construct properties for first-time home buyers, reported Reuters.
Lumber prices have also fallen to record lows which could also soften the turnaround for the construction industry. Prices have declined 24.1% from this year’s peak in March.
Building permits, which point to future construction, decreased 4% to a 1.4 million annual rate. Applications to build single-family homes eased to the lowest since May 2023, while authorizations for multifamily projects fell more than 11%, reported Bloomberg.