WASHINGTON — Builders finished 2% fewer new homes and apartments in August than in July, the government said Tuesday, as rising interest rates continued to dampen the construction industry.
Housing completions dropped to a seasonally adjusted annual rate of 1.66 million units in August from 1.69 million in July, the Commerce Department said. It was the fifth decline in eight months.
Single-family homes were completed at an annual rate of 1.05 million, down 5% from July. Multi-unit construction increased by 5% to an annual rate of 611,000 in August.
Total housing completions had risen by 6% in July after a 1% drop in June and an 11% plunge in May.
So far this year, housing completions have increased in January, April and July, but fallen in February, March, May, June and August.
A total of 1.76 million homes and apartments--1.12 million single-family and 636,000 multi-unit structures--were completed in 1986, 3.1% higher than 1985 and the best showing since 1979.
Analysts had expected a decline in multi-unit construction this year because of the new tax law, but were optimistic about the single-family sector at the start of the year, believing that then-prevailing low mortgage interest rates would spur sales.
However, the average rate for 30-year mortgages has been climbing this year, from a nine-year low of 9.07% in March to 11.21% last week.
During the first eight months of the year, 1.09 million housing units were completed, 2% fewer than during the same period in 1986.