Housing Starts Slide as Import Costs Climb — Evening Brief – 06.16.26

The U.S. economy delivered another mixed signal in May as housing construction weakened sharply even as import prices continued to climb.

U.S. housing starts fell to a seasonally adjusted annual rate of 1.177 million in May, a 15.4% drop from April’s 1.392 million and well below the 1.430 million economists had expected. The pace was 8.7% lower than a year earlier, signaling sustained pressure from higher financing and construction costs. Single‑family starts dipped 1.9% to 882,000, only modestly below April’s revised 899,000, suggesting demand for stand‑alone homes is cooling but not collapsing.

Permitting activity painted a slightly less negative picture. Overall building permits eased 0.7% to an annual rate of 1.413 million, just under consensus and 0.2% below year‑ago levels. Single‑family authorizations inched up 0.6% to 886,000, hinting that builders remain cautiously willing to start future projects despite near‑term headwinds. Completions fell more sharply, down 8.1% to 1.313 million and 14.2% below last year, which could further constrain available supply.

At the same time, trade price data pointed to persistent cost pressures. Import prices rose 1.9% month over month in May, topping expectations and staying close to April’s revised 2.0% gain, pushing the year‑over‑year increase to 6.7%, the largest since August 2022. Fuel and lubricants led the move with a 12.5% monthly jump after an 18.6% surge in April, producing a 47% rise over three months, the biggest advance since mid‑2020. Nonfuel import prices gained 0.8% after a 0.6% increase, while food‑related imports posted their first decline since November 2025.

Export prices climbed 1.3% on the month and 11.2% over the past year, also the strongest annual gain since August 2022. Higher prices for nonagricultural exports—spanning industrial supplies, capital goods, consumer products, and autos—drove the increase, marking a sixth straight month of export price gains.