Those challenges were also evident in other data showing permits for future construction of single-family housing dropped to a two-year low in May as builders grappled with higher costs from duties on materials, including lumber, steel and aluminum.

Higher borrowing costs as the Federal Reserve responded to the heightened economic uncertainty from tariffs by pausing its interest rate cutting cycle have weighed on demand for homes, resulting in excess inventory of unsold houses on the market.

Fed officials at the end of a two-day policy meeting later on Wednesday were expected to leave the U.S. central bank’s benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December, as it also monitored the economic fallout from the conflict between Israel and Iran.