Construction rose 3.9 per cent during the month as homebuilders struggled to meet Americans' demand for housing.

The U.S. government said Wednesday that so-called housing starts rose to 1.45 million units from 1.4 million in June. That's how many homes would be built in a full year if starts were the same every month as they were in July.

Housing starts declined from a peak of 1.8 million units in April 2022.

July's numbers were in line with Wall Street's expectations. Wall Street economists expected starts to rise to 1.45 million units. All data are seasonally adjusted.

June's new housing starts were revised down sharply, from an initial decline of 8 per cent to a drop of 11.7 per cent to 1.44 million units.June's drop was the largest in a year.

Builders' business was boosted by strong interest from would-be homebuyers due to a lack of options for homebuyers in the resale market, but this is likely to further dampen demand for home purchases due to persistently high mortgage rates, which could hurt homebuyers in the coming months.

Single-family construction led the way in July, while multifamily construction was flat. the increase in construction activity in July was led by the West, where builders reported a 28.5 per cent increase in single-family starts. the increase in construction activity was driven by the West, where builders reported a 28.5 per cent increase in single-family starts.

As a sign of future construction, building permits rose 0.1 percent to 1.44 million.

Key Details The pace of construction of single-family homes rose 6.7 per cent in July, with flat construction flat.

Homebuilders ramped up construction in the West, followed by the Midwest. Housing starts rose 14 percent overall in the West and 10 percent in the Midwest.

Of the four regions, only the South saw a decline in housing starts. housing construction in the region fell 1.3 percent in July.

Permits for single-family homes rose 0.6 percent in July, while building permits for homes with at least five or more units fell 0.2 percent.

As of July, about 1.68 million homes were under construction.

The Big Picture: Homebuilders were seen as the biggest winners of the housing market's freeze, but even their glow may be fading in the new normal of 7% mortgage rates.

Despite an uptick in housing starts in July, builders remain concerned about demand and are raising sales incentives to boost sales. The percentage of builders cutting prices to boost sales rose to 25% in August for the first time in five months, the National Association of Home Builders said. The average price cut was 6 percent. Builders are becoming less optimistic about future sales as the flow of potential homebuyers dwindles.

What are they saying?" Ali Jaffery, an economist at CIBC Economics, wrote in a report, "The U.S. housing starts data for July did not show any major dramatic changes, keeping in line with the slow pace of homebuilding since last summer." Momentum for housing starts over the past few months has picked up from the lows seen at the start of the year, but the level is still quite weak.

Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, wrote in a note that housing activity appears to be forming a bottom after a plunge from the beginning of 2022 to the beginning of this year.

He also noted that starts on multifamily housing, which includes townhouses and condos, fell to their lowest in nearly two years in July.

Stanley said, "The condo construction boom in 2021 and 2022 is starting to lose steam." A large supply of flats is coming online, which could help curb the upward trend in housing costs. The slowdown in multifamily housing starts in recent months suggests that builders have determined that there is enough flat supply in the pipeline.

MARKET REACTION: U.S. stocks opened lower in early trading Wednesday. the yield on the 10-year Treasury note rose above 4.2 percent.