After reporting a sharp increase in new residential construction in the U.S. in the previous month, the Commerce Department released a report on Wednesday showing a much steeper than expected pullback in housing starts in the month of June.
The Commerce Department said housing starts plunged by 12.3 percent to an annual rate of 1.173 million in June after jumping by 4.8 percent to a revised rate of 1.337 million in May.
Economists had expected housing starts to drop by 2.2 percent to a rate of 1.320 million from the 1.350 million originally reported for the previous month.
With the much bigger than expected decrease, housing starts fell to their lowest annual rate since hitting 1.158 million last September after reaching their highest rate since July of 2007 in May.
The steep drop reflected notable declines in both single-family and multi-family starts, which plummeted by 9.1 percent and 19.8 percent, respectively.
Building permits, an indicator of future housing demand, also fell by 2.2 percent to an annual rate of 1.273 million in June after tumbling by 4.6 percent to a rate of 1.301 million in May.
The continued decrease came as a surprise to economists, who had expected building permits to climb to an annual rate of 1.330 million.
The unexpected drop came as a 7.6 percent slump in multi-family permits more than offset a 0.8 percent uptick in single-family permits.
On Tuesday, the National Association of Home Builders released a separate report showing homebuilder confidence in the U.S. has held steady in the month of July.
The report said the NAHB/Wells Fargo Housing Market Index remained unchanged in July after dipping to 68 in June. The unchanged reading matched economist estimates.
"Consumer demand for single-family homes is holding strong this summer, buoyed by steady job growth, income gains and low unemployment in many parts of the country," said NAHB Chairman Randy Noel.
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May 01, 2026 15:54 ET Central banks dominated the economics news flow this week with almost all major ones announcing their latest policy decisions and many boosted expectations for a rate hike in June. In other news, several countries released the preliminary data for first quarter economic growth. In the U.S., comments by Fed Chair Jerome Powell were also in focus as his term ends this month.