New U.S. home construction dropped in August to the lowest level since 2020, underscoring the ongoing challenges facing the housing market.

Housing starts tumbled 11.3% last month to an annual rate of 1.28 million units, according to new Commerce Department data released Tuesday. That is well below Refinitiv economists' forecast for a pace of 1.44 million units.

Applications to build – which measures future construction – saw an uptick in August, climbing 6.9% over the course of the month to an annualized rate of 1.54 million units. Compared with the same time last year, building permits are down about 2.7%. 

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