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New Home Market Shows Signs of Slowing

Housing starts were up 5.9 percent in July, however this increase was due mostly to a surge in multifamily housing construction, according to the Commerce Department. Single-family housing starts actually declined 2.2 percent in July and hit an eight-month low.

"They're just not showing recent strength," Patrick Newport, economist with IHS Global Insight, told USA Today. "This market has lost some of its momentum."

A combination of factors may be to blame for this decline. Rising cost of borrowing, tight credit conditions, and labor and lot shortages may be causing builders to hesitate starting new projects, analysts say.

At the same time, however, single-family housing starts have increased 24 percent over 2012 levels, so an increase in construction is still showing, regardless of recent declines. Building permits, which serve as an indicator of future housing starts, were up 2.7 percent in July compared to June. That number is 12.4 percent higher than year-ago levels.

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