Tuesday's data sharpened the same affordability story households have been seeing for months. New-home construction slowed, fewer existing-home purchase contracts were signed, and mortgage costs stayed high enough to keep many buyers on the sidelines. At the same time, imported fuel became cheaper in July, pulling overall import prices lower and giving inflation a small offset.
Single-family homebuilding fell to a multi-year low
Single-family housing starts fell 9.9% in July to a seasonally adjusted annual rate of 808,000, according to the Commerce Department data reported by Reuters. That was the lowest pace since November 2022 and 15.7% below a year earlier. Total housing starts, which include apartments and other multifamily buildings, fell 12.4% to 1.239 million units.
Permits were somewhat better. Overall residential building permits rose 5.0% to a 1.443 million annual rate, while single-family permits rose 2.5% to 894,000. Permits can signal future construction, but one monthly increase does not guarantee that builders will quickly add supply. High financing costs, construction expenses, and unsold inventory can still cause projects to be delayed.
Pending home sales also moved lower
Contract signings for existing homes fell 2.3% in July, reaching their lowest level since January, according to the National Association of Realtors data cited by Reuters. Pending sales usually lead completed transactions by a month or two, so the decline suggests the resale market may stay soft in the near term.
The pressure remains familiar: mortgage rates have stayed near their highest levels in more than a year, while home prices remain elevated. That combination raises monthly payments and reduces how much home a given income can support. It can also keep current owners with older, lower-rate mortgages from listing their homes, which limits supply in some markets.
Import prices fell, but the relief came mostly from petroleum
U.S. import prices fell 0.4% in July, according to the Bureau of Labor Statistics data reported by The Wall Street Journal. Petroleum import prices dropped 7.5%, more than offsetting a 0.3% increase in nonpetroleum import prices. Import prices were still 5.9% higher than a year earlier.
That distinction matters. Cheaper imported oil can reduce pressure on fuel and transportation costs, but nonfuel imports were still getting more expensive. The import-price index also excludes tariffs and transportation costs, so it is only one part of the pipeline that eventually influences what households pay.
What this means for household money
Housing remains the clearest pressure point in today's data. Weak construction and fewer purchase contracts show that high monthly payments are still constraining both supply and demand. Buyers may encounter more incentives or less competition in some markets, but affordability should still be tested using the full payment, including principal, interest, taxes, insurance, HOA costs, and maintenance. On prices, the drop in imported petroleum is helpful, but broader import costs are still elevated enough that households should not expect a broad decline in everyday prices from this report alone.
What to watch next
- Federal Reserve meeting minutes on August 19 for more detail on how officials viewed inflation and the softer labor market at their July meeting.
- July new-home sales on August 25 to see whether weaker construction is being matched by weaker buyer demand.
- Whether single-family building permits continue to improve after July's increase.
- Whether petroleum prices stay lower long enough to reduce pressure on gasoline, shipping, and other energy-sensitive household costs.
- Whether mortgage rates move enough to change buyer demand rather than just producing small week-to-week payment differences.