Nationwide home building declined sharply in June, a possible sign that construction labor shortages and rising material costs are causing more damage to the housing market than many analysts initially believed.

Housing starts declined 12.3% in June from the prior month to a seasonally adjusted annual rate of 1.173 million, the Commerce Department said Wednesday. This was the largest monthly percent drop in about a year and a half, driven by construction declines in all regions of the U.S. for almost all types of housing.

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