The U.S. economy is moving along at a less than exuberant pace. For example, new home construction has slowed to a rate not seen in nearly three years.

According to data released by the U.S. Census Bureau last month, the rate of new privately owned home construction projects starts measured at a seasonally adjusted annual rate of 1,307,000 in August. The number reflects the projection of starts that would occur if the pace continued for an entire year. Notably, it is 8.5% below the revised annual rate for the month of July, which was estimated at 1,429,000, and 6% below the rate of 1,391,000 starts in August 2024.

The above rate references starts for all home construction projects, including single-family homes, townhomes and apartments. Drilling down to single-family homes specifically, the trend is similar. The Census Bureau reports that the seasonally adjusted, annualized rate in August for single-family housing starts measured 890,000, which is 7% percent below the revised July figure of 957,000.

Reporting on the figures, Reuters notes that the single-family rate is the lowest it's been since April 2023, a 2.5-year low. Reuters adds that the slowdown in starts resulted from an abundance of unsold inventory. Builders are slowing down the construction of new homes until they can sell more of the homes they have already built.

Several factors have contributed to the slow rate of home sales, including a lackluster job market, uncertainty about the economy and high interest rates. The U.S. central bank cut its benchmark overnight interest rate by a quarter percentage point to a 4.00%-4.25% range last month. It remains to be seen whether it will make more cuts, or what the long-term impact of the most recent ones will be on the housing market and the economy overall.

There was some variation in the number of starts regionally across the country. For example, housing starts were up slightly in the Northeast and West. They were down in the South. Figures were somewhat mixed in the Midwest, where all housing starts were down, but starts for single-family homes were up.