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Key takeaways:
Amidst a challenging economic climate, the US housing market has faced significant hurdles in recent months.
Single-family starts declined again in June and affordability and economic uncertainty continue to weigh on builder confidence.
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Housing starts came in at a seasonally adjusted annual rate of 1.321 million units in June. This was up 4.6% from an upwardly revised 1.263 million units the prior month, according to the Census Bureau.
Single-family starts dropped 4.6% month over month to 883,000, the lowest rate since July of last year.
While the rate of June starts in the Northeast jumped 73.3% from the prior month, all other regions experienced declines. For the year, total actual starts (not seasonally adjusted) through June, at 684,600, were down 1.0% from the same six-month period last year. Actual single-family starts are running 6.9% behind year-ago levels.
Freddie Mac released the results of its Primary Mortgage Market Survey (PMMS), showing the 30-year fixed-rate mortgage (FRM) averaged 6.63%.
“The 30-year fixed-rate mortgage dropped to its lowest level since April,” said Sam Khater, Freddie Mac’s Chief Economist. “The decline in rates increases prospective homebuyers’ purchasing power and our research shows that buyers can save thousands by getting quotes from a few different lenders.”
Although Jerome Powell was widely expected to announce on Wednesday July 30 that the Federal Reserve would leave the federal funds rate unchanged, the dissent from the two Trump-appointed Federal Reserve board officials regarding the decision — a first in 30 years — highlighted the difficult position in which the Fed finds itself.
The agency is under mounting pressure from the Trump administration to lower rates. However, it is also trying to bring inflation down to its stated 2% goal. Inflation, however, has ticked up slightly in the past two months.
Estimates based on data released last week show that total [Personal Consumption Expenditures (PCE)] prices rose 2.3% over the 12 months ending in March and that, excluding the volatile food and energy categories, core PCE prices rose 2.6%
As the lumber industry is sensitive to movement in mortgage interest rates, many traders believe that current elevated levels will continue to play a role in hampering demand in 2025.
“I think it’ll draw out what we’re already experiencing. If the rate starts to lower, it will give people more confidence,” an Eastern spruce-pine-fir buyer said. “I think it’ll keep things pretty muted on the demand side, probably for the rest of the year.”
According to Freddie Mac, the current average 30-year fixed mortgage rate is at 6.74%. This is down from the 2025 peak of 7.04% reached in mid-January. The last rate cut made by the Fed was in December 2024, when it was lowered by 25 basis points.
“It’s probably a net negative, but short-term interest rate impact on the long end of the rate curve, 10-year treasury bills, mortgage rates, etc., is pretty modest at the moment. That is largely due to a combination of the economic growth outlook and inflation concerns being the bigger factors driving longer-term interest rates,” Fastmarkets senior economist Dustin Jalbert said.
Traditional supply-demand market dynamics aside, a wide range of troubling factors beyond the softwood lumber industry have undermined southern yellow pine (SYP) traders’ confidence throughout 2025.
Stubbornly higher mortgage interest rates draw constant blame for undermining the housing market and, as a result, limiting demand for framing lumber. The Federal Reserve’s decision on Wednesday July 30 to leave the Federal Funds rate unchanged contributed to a widespread perception among softwood lumber traders that prospects appear dim in the near term for a significant improvement in economic conditions.
Some traders have lamented that even a modest reduction in mortgage interest rates might be enough to stir an ailing housing market.
Beyond that, frequent shifts in news about tariffs and the perceived potential for further changes have been constant sources of concern for many traders. In April, consumer confidence in the US economy fell to its lowest level since May 2020, largely due to anxiety over the impact of tariffs. Consumer confidence has since recovered moderately, but concerns about tariffs have lingered.
Wars in the Middle East and Ukraine and the ongoing political tension surrounding those conflicts add to the overall angst. These factors have contributed to conservative trading in southern pine markets this year, many observers note. Buyers throughout the distribution pipeline have remained unusually averse to risk even when purchasing the most essential core items.
The US housing market is facing a complex set of challenges, from inflation and high-interest rates to regional disparities in housing starts and sales. Staying informed is crucial for industry professionals and investors looking to navigate this volatile landscape.
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This piece was last updated on 13/08/2025 the information is correct as of this date