New residential construction declined in July as builders continued to feel the impact of high interest rates.

According to Census Bureau data released Friday, housing starts fell 6.8 percent from the previous month to a seasonally adjusted annual level of 1.238 million units, marking a four-year low. Single-family housing starts fell 14.1 percent to a seasonally adjusted annual level of 851,000.

The data comes against a backdrop that, while mortgage rates have been trending downward in recent weeks, remain high compared to the period immediately after the pandemic began, discouraging many buyers and sellers from purchasing.

At the same time, the housing stock is also increasing.

“The collapse in both housing starts and building permits in July to their lowest levels since the pandemic only partially reflects the temporary impact of Hurricane Beryl,” wrote Paul Ashworth, chief economist at Capital Economics, after the release.

“Although lower interest rates should continue to support new home sales, existing oversupply in some regional markets may be a greater constraint than we previously expected,” the economist added.

Friday’s data showed that building permits for single-family homes also declined last month, down 0.1 percent from the previous month to 938,000. Meanwhile, 408,000 building permits for multifamily homes were issued in July.

In August, homebuilder confidence fell to its lowest level since December as high interest rates and record home prices continue to reduce demand for new homes.