New housing construction rose 2.4 percent in July, paced by building of multi-family housing, but fears of rapidly rising interest rates sent building permits down by 5.4 percent, the sharpest drop in seven months, the Commerce Department said Wednesday.
The figures sent overall housing construction to a seasonally adjusted annual rate of 1.489 million units, slightly better than the 1.47 million analysts had predicted.The 2.4 percent hike was led by a 12 percent jump in multi-family housing, the department's Census Bureau reported.
New construction of single-family housing was off 0.8 percent after rising a revised 7.5 percent in June, continuing a weak trend in this area, the department said.
As interest rates have risen in recent months, predictions of steeper jumps sent building permits down 5.4 percent to a seasonally adjusted annual rate of 1.413 million units, the steepest drop since January.
Permits for single-family housing were off 0.9 percent, and permits for multi-family housing were down 14.5 percent.
The Federal Reserve last week raised its benchmark interest rate from 6 percent to 6.5 percent to curb domestic demand and cool the inflationary threat from what it considers an overheated economy. The resulting rise in home mortgage interest rates has added to the troubles of a generally weak housing industry.
New housing construction rose 9.2 percent in the Northeast, 12.1 percent in the Midwest. It fell 1.2 percent in the south and 3.2 percent in the West.