Home building in May fell to its slowest pace in four years despite a supply shortage. That trend could put even greater strain on buyers.According to The New York Times, the pace of home building in May dropped to its slowest rate in four years, despite a shortage of supply. This trend could further strain buyers in the already struggling housing market.

The latest government data released on Thursday showed that new home construction fell 5.5 percent last month, with an annualized rate of 1.28 million. This decline was largely due to builders pulling back on new residential projects in response to high interest rates. Both single-family and multifamily home construction slowed down, and building permits also dipped by 3.8 percent, indicating less future construction.

The rise in interest rates, with the average rate on 30-year mortgages reaching historic highs, has contributed to weakening housing demand and increasing costs for builders. This has led to their reluctance to start new projects. In fact, home builder sentiment dropped to its lowest level this year in May and continued to decline in June, according to Nationwide economist Daniel Vielhaber.

The decrease in construction is only exacerbating the strain on potential home buyers. Chen Zhao, who leads the housing economics team at Redfin, explains that in order to have more housing supply, there needs to be more building. Therefore, any decrease in construction is bad news for consumers looking to buy a home.

The latest housing construction data from the U.S. Census Bureau and the Department of Housing and Urban Development suggests that home prices are unlikely to drop significantly in the next couple of years. This is because the data points to a tighter housing supply in the near future, according to Ms. Zhao. She adds that this is one more factor that will keep home price growth high.

In conclusion, the slowdown in home building in May, as reported by The New York Times, highlights the ongoing struggles in the housing market. With high interest rates and a shortage of supply, buyers are facing even more challenges in finding affordable homes. 

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