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The U.S. Census Bureau and the Department of Housing and Urban Development reported Wednesday morning that new housing starts in July fell to a seasonally adjusted annual rate of 1.155 million, a decrease of 4.8% from the downwardly revised June rate of 1.213 million and a decrease of 5.6% compared with the July 2016 rate of 1.223 million. The consensus estimate from a survey of economists had been a rate of around 1.225 million.

The revision to the June rate dropped 2,000 new housing starts from the previously reported total.

The seasonally adjusted rate of new building permits fell to 1.223 million, down 4.1% from the upwardly revised June rate of 1.275 million but up 4.1% from the July 2016 rate of 1.175 million. The consensus estimate called for 1.246 million new building permits.

Single-family housing starts slipped in July to an annualized rate of 856,000, down 0.5% from the revised June rate of 860,000. However, they rose by 10.9% year over year in July.

The July report on new housing starts came in well below expectations and the prior month’s revised estimates. The good news is that starts on single-family housing are way up year over year, the sector where demand has been highest and inventories lowest. As new homes get built, prices should moderate and more first-time buyers will have a chance to enter the market.

Permits for new single-family homes were flat month over month in July, at an adjusted annual rate of 811,000. The rate rose 13% year over year.

Multifamily starts for buildings with five or more units decreased by 11.7% year over year in July and dropped by 12.1% compared with June.