U.S. homebuilding fell for a third straight month in July amid a steep decline in the construction of multi-family housing units, but a jump in permits to a seven-month high offered hope for the struggling housing market.

Declining mortgage rates have done little to stimulate the housing market as land and labor shortages constrain builders’ ability to construct sought-after lower-priced homes. Housing and manufacturing are the weakest spots in the economy, which last week has seen a heightened risk of recession.

“After almost a year, lower mortgage rates have done nothing to boost residential housing construction,” said Chris Rupkey, chief economist at MUFG in New York. “Housing construction remains the weak link for new investment in the economy and will keep GDP growth slower than it would have been.”

Housing starts dropped 4 percent to a seasonally adjusted annual rate of 1.191 million units last month, the U.S. Commerce Department said Friday. Data for June was revised down to show starts falling to a pace of 1.24 million units, instead of dropping to a rate of 1.25 million units as previously reported.

The 30-year fixed mortgage rate has dropped to 3.60 percent from a peak of 4.94 percent in November, according to data from mortgage finance agency Freddie Mac.

Homebuilders say lower borrowing costs have not boosted the housing market because mortgage rates have declined due to economic uncertainty.

(SD-Agencies)