U.S. homebuilding fell for a second straight month in June and permits dropped to a two-year low, Reuters reports, suggesting the housing market continues to struggle despite declining mortgage rates.
Housing completions are also at a six-month low, according to a Commerce Department report released Wednesday, indicating an inventory squeeze that has haunted the market could persist for a while.
Housing starts decreased 0.9% last month as a rebound in the construction of single-family housing units was overshadowed by a plunge in multi-family homebuilding, the Commerce Department said.
Single-family homebuilding, which accounts for the largest share of the housing market, increased 3.5% in June, partially recouping some of May’s sharp drop. Single-family housing starts fell in the Northeast, but rose in the Midwest, West and South.
Building permits tumbled 6.1% in June, the lowest level since May 2017. Permits have been weak this year, with much of the decline concentrated in the single-family housing segment.
Permits are not the only thing slowing down, as CNBC reports that all aspects of the architecture business are suddenly slowing, indicating an overall weakening in commercial real estate demand.
A key read on the industry, the Architecture Billings Index, fell into negative territory in June, according to the American Institute for Architects. Inquiries for new projects hit a decade low, while design contracts also fell.
“With billings declining or flat for the last five months, it appears that we are settling in for a period of soft demand for design services,” says AIA chief economist Kermit Baker. “With the new design contracts score reaching a 33-month low and the project inquiries score hitting a 10-year low, work in the pipeline may start to get worked off, despite current robust backlogs.”
Read the full Reuters report.