Housing Starts Declined In May

Housing construction last month dipped to its lowest level in almost a year, providing fresh evidence that the Federal Reserve’s six interest rate increases are beginning to slow the economy.

Builders began work on new homes at a seasonally adjusted annual rate of 1.59 million units in May, a 3.9 percent drop from April’s level, the Commerce Department reported Friday.

The bigger-than-expected decline left housing starts at their lowest level since last June, when the Fed’s latest cycle of interest-rate increases began.

“Housing is beginning to crack!” exclaimed economist Ken Mayland of ClearView Economics. “It is the first domino to fall. A downturn of housing is a nonnegotiable requirement for … the Fed to buy into the view that previous interest rate increases are taking hold and a soft landing is commencing.”