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The residential construction in the US fell to a low-five-year low in May, while housing builders were struggling with volatile rates on imported materials, stubborn high mortgage interest and surplus stocks of non-sold-out units.
The start of housing fell month on a month from 9.8 percent to a seasonal annual percentage of nearly 1.26 million houses in May, according to data released by the Census Bureau on Wednesday. It was the lowest reading since the COVID-19 Pandemie Bouwprojecten held up in 2020 and expected economists under the nearly 1.36 million starts.
The permits for new construction also decreased more than expected an annual percentage of 1.38 million units in May, the lowest since June 2020.
The soft data came only a few hours before the American Central Bank would give the last decision of the interest costs on Wednesday afternoon and when President Donald Trump criticized the Federal Reserve chairman Jay Powell for not lowering the interest rates.
Economists said the construction was weighed by the volatility of Trump’s trade war, which is expected to increase the costs for crucial building materials. The US president has repeatedly threatened major rates for trading partners, often before they withdraw later.
“Homebouwers are taking a break on new construction in the light of the continuous tariff uncertainty and the difficulty with which they are confronted with the prices of new projects,” said Selma Hepp, chief economist at real estate advisor Cotality.
The modest building figures come after a study by the National Association of Home Builders and Wells Fargo, released on Tuesday, discovered that the sentiment of housing had been sunk at the lowest level since 2022.
Builders reported that they were increasingly under pressure to lower prices and spend more on stimulation packages – such as design credits and interest rates – to load shares into a static market.
“The margins are compressed,” says Ali Wolf, chief economist at building data company Zonda. “If builders want to compete, they now have to offer many concessions.”
Wolf added that economic uncertainty among consumers also weighed on the hardware store. “Home Builders must know that they can sell a house to build a house [but] There is currently a lot of doubt. ”
These signs of weakness on the housing market come when the FED is preparing to announce its last decision about interest rates. The central bank is generally expected to continue to borrow the costs, but investors will keep a close eye on any changes in the predictions of policy makers, and for all Powell Dovish signals during his press conference.
“The mortgage interest at the current level ensures that the living sector contracts and prices fall,” said Andrew Hollenhorst, head -American economist at Citi. “That is a clear indication that the interest rates remain restrictive and must be reduced.”
The rate on a 30-year mortgage fell to 6.84 percent a week ending on June 13 from 6.93 percent seven days earlier, according to data on Wednesday of the MortGage Bankers Association. The rates reached a peak of 23 years of almost 8 percent in 2023 and have not been more than 6 percent since September 2022.
