Homebuilder sentiment recently reached its third-lowest level since 2012. 

The surprisingly large decline in the pace of housing starts comes as builder sentiment remains depressed by tariff worries and high prices. 

The pace of new-home construction was higher than economists expected, even as homebuilders expressed concern about the impact of tariffs and supply-side challenges. 

At the same time, the median sales price for a new home hit its highest level since 2022, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.   

At the same time, builder sales expectations for the next six months posted their second-largest drop since the sentiment index started in 1985. 

The median-sales price slid from $425,600 in October to $402,600 last month. 

Multifamily construction, meanwhile, rose on a monthly basis. 

The median price of a new home sold during the month was also up, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. 

Multifamily starts, meanwhile, declined, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said.    

The 716,000 per-year rate of new-home sales topped the consensus estimate of 700,000. 

July’s seasonally adjusted annual rate of 739,000 represented a 10.6% jump from June’s upwardly revised rate of 668,000. 

New-home construction jumped 5.7% month over month after a soft March, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. 

Declining interest rates spurred the increase. 

Specifically, single-family homes were built at a seasonally adjusted annual rate of 963,000, up 3.2% from 933,000 in August and up 8.6% from 887,000 a year earlier, according to government figures. 

Single-family home permits and completions, meanwhile, also rose, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. 

Low inventory and high demand are buoying builder sentiment in the face of several headwinds.