New residential construction in the US declined in July as single-family starts slid to the slowest pace since 2022.

Housing starts fell 12.4% last month to an annualized rate of 1.24 million, according to federal government data released Tuesday. That fell short of the 1.35 million pace expected by economists surveyed by Bloomberg. 

Single-family starts decreased 9.9% to an annual rate of 808,000, the weakest since November 2022. Multifamily starts dropped nearly 17%, falling back after surging in the previous month.

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The slide in starts points to a housing market that has struggled to gain momentum. Mortgage rates, which have climbed higher since the start of the Iran war, and elevated home prices continue to weigh on demand. 

While residential investment added to economic growth in the second quarter for the first time since 2024, the lift was negligible. The outlook for housing starts remains rocky. 

Overall building permits increased 5% to the highest since February, which could signal a pickup in construction in coming months. Permits for one-family homes climbed to a four-month high, federal data show. But a recent Bloomberg Intelligence survey showed 70% of investment professionals see single-family starts declining this year.

Housing starts declined across the South, Midwest and West. Construction activity improved in the Northeast, buoyed by multifamily projects. 

Home Depot Inc., a home improvement store, beat estimates in the latest quarter as customers kept spending on smaller projects. But Chief Financial Officer Richard McPhail said the housing market has not yet picked up and "frozen conditions" persist for large home improvement projects.

The government report also indicated both overall and single-family housing completions fell to their lowest since 2020. 

The new residential construction data are volatile, and the government report showed 90% confidence that the monthly change ranged from a 2.9% decline to a 21.9% drop. Separately, the National Association of Realtors is releasing its July report on pending-home sales on Tuesday.