carpenters work on building new townhomes that are still under construction while building material supplies are in high demand in tampa florida us may 5 2021 reutersoctavio jones july 19 reuters  new us homebuilding activity fell to a ninemonth low in june and permits for new construction projects slipped as well the latest indication of a cooling housing market as surging mortgage rates reduce affordability housing starts fell 2 to a seasonally adjusted annual rate of 1559 million units last month the lowest level since september 2021 the commerce department said on tuesday data for may was revised higher to a rate of 1591 million units from the previously reported 1549 million units economists polled by reuters had forecast starts would come in at a rate of 1580 million units permits for future homebuilding fell06 to a rate of 1685 million units the housing market is very sensitive to interest rates and with the federal reserve lifting rates aggressively to blunt inflation running at its highest in four decades the market has softened notably this year the average contract rate on a 30year fixedrate mortgage climbed to nearly 6 in june up from about 33 at the start of the year which has put home purchases out of reach for a growing number of prospective buyers particularly firsttime purchasers while it is unclear how much higher mortgage rates will climb its almost certain they will remain high for some time with the fed set to raise interest rates again at its meeting next week and more hikes to come through the end of the year an oxford economics index out last week showed homes were the least affordable in the first quarter of 2022 at any time since the 20072009 financial crisis and it forecast that picture would worsen through the rest of this year meanwhile a survey out on monday showed the national association of home builderswells fargo housing market index suffering its secondlargest drop on record in july with a gauge of prospective buyer traffic falling below the breakeven level of 50 for a second straight month read more