In May, new home construction in the US dropped to its slowest pace in four years due to higher interest rates. Housing starts fell by 5.5% to a 1.28 million annualized rate, below economists' estimates. Building permits also declined by 3.8% to a 1.39 million annual rate. The slowdown affected both multifamily and single-family units, with permits for single-family homes decreasing for a fourth consecutive month. This decline in homebuilding suggests a potential drag on economic growth, despite previous stabilization. Factors like cooling inflation and consumer spending may prompt the Fed to cut interest rates, potentially lowering mortgage rates. Major homebuilders are offering incentives to boost demand amid high rates, though a housing shortage persists, driving prices up. Construction decreased in most regions, with home completions also falling. Despite the volatility of housing starts data, the overall trend points to a sluggish market impacted by monetary policy and supply constraints.