WASHINGTON — Home construction fell a sharp 7% in July as home builders struggled to cope with a variety of headwinds.

The decline in July put home construction at a seasonally adjusted annual rate of 1.53 million units, the Commerce Department reported today.

Applications for building permits, which can forecast future activity, rose 2.6% in July from the June level to an annual rate of 1.64 million units.

A survey of home builder confidence saw expectations fall sharply in August to the lowest level in a year as builders struggled with high construction costs, supply shortages and rising home prices.

The National Association of Home Builders/Wells Fargo said its survey dropped five points to a reading of 75 this month.