Live Updates: Inflation in Canada drops to 7.6%

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The rate of new home construction in the United States in July fell to its lowest level since the start of 2021, as high mortgage rates and soaring inflation weakened demand.

U.S. housing starts in July fell 9.6% month-over-month to an annualized pace of nearly 1.45 million, according to data from the Census Bureau and the Department of Housing and of urban development published on Tuesday.

That was below a forecast of 1.54 million from economists polled by Reuters and the revised reading of 1.6 million the previous month. The rate last fell below 1.45 million in February 2021.

Home building permits, considered a leading indicator of the housing market, fell 1.3% from the previous month to an annualized pace of 1.67 million, down from the revised rate of 1, 69 million from the previous month. Economists had estimated it at 1.65 minutes.

“Housing starts are succumbing to the pressures of higher interest rates and generally tighter financial conditions,” Joshua Shapiro, MFR’s chief US economist, wrote in a note. “The headwinds facing the single-family sector are particularly strong, with the effect of significantly higher mortgage rates.”

Single-family housing starts fell 10.1% on an annualized basis to 916,000.

The average interest rate on a 30-year mortgage is over 5%, US mortgage provider Freddie Mac reported last week, and the median home price is at an all-time high above $400,000.

U.S. homebuilder confidence fell below the breakeven 50 mark this month for the first time since May 2020, according to data from the National Association of Home Builders.

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