New home construction slumped in June as both housing permits and new  home starts fell from May levels, the Census Bureau and the Department  of Housing and Urban Development reported on Tuesday.

Permits came in at 1.685 million, down 0.6% from the revised May reading  of 1.695 million while starts fell 2% to 1.559 million, compared to  May’s revised 1.591 million.

“Housing starts decreased in June for the third month in a row, as the  for-sale market cools in reaction to evolving market conditions,” said  Kelly Mangold, a principal at RCLCO real estate consulting.

“Rising mortgage rates continue to impact this industry, and the  availability of labor and materials continues to slow the rate of new  starts.”

“There is a lot of uncertainty around future conditions, and the  lingering possibility of a recession has caused both builders and buyers  to take a temporary ‘pause’ as they adjust to the evolving market,” she  added.

Housing has been among the strongest sectors of the economy since the coronavirus struck America in early 2020.

But, as with other areas of the economy that are now slowing, housing is showing signs of a downturn.

“Home building is a leading economic and housing indicator, and the  decline in homebuilder confidence suggests that housing, and  particularly the new home market, is slowing down,” Odeta Kushi, deputy  chief economist at First American, said ahead of the report.

“Inflation is hurting consumer confidence and purchasing power while  higher mortgage rates alongside high home prices dampen affordability,”  she added.

“The result? A reduction in buyer traffic and sales. And there’s another headwind for builders: buyers now have more choice.”