U.S. housing starts fell significantly in July, dropping 12.4% to a seasonally adjusted annual rate of 1.239 million, well below the consensus forecast of 1.350 million. The sharp decline was driven by a 9.9% retreat in single-family starts, as high mortgage rates and elevated home prices continued to dampen current construction activity. June’s figure was also revised lower to 1.415 million from the previously reported 1.427 million.
Conversely, building permits—a leading indicator of future demand—unexpectedly rose 5.0% to an annual rate of 1.443 million, comfortably surpassing the 1.370 million expectation. While the divergence highlights a current pullback in active building, the uptick in permits suggests a potential pipeline for future recovery if financial conditions ease. Markets reacted to the mixed data with a slight softening of the U.S. Dollar as investors prioritized the substantial miss in current activity over the forward-looking permit growth.