We investigate phonological encoding during unscripted sentence production, focusing on the effect of phonological overlap on phonological encoding. Previous work on this question has almost exclusively employed isolated word production or highly scripted multi-word production. These studies have led to conflicting results: some studies found that phonological overlap between two words facilitates phonological encoding, while others found inhibitory effects. One worry with many of these paradigms is that they involve processes that are not typical to everyday language use, which calls into question to what extent their findings speak to the architectures and mechanisms underlying language production. We present a paradigm to investigate the consequences of phonological overlap between words in a sentence while leaving speakers much of the lexical and structural choices typical in everyday language use. Adult native speakers of English described events in short video clips. We annotated the presence of disfluencies and the speech rate at various points throughout the sentence, as well as the constituent order. We find that phonological overlap has an inhibitory effect on phonological encoding. Specifically, if adjacent content words share their phonological onset (e.g., hand the hammer), they are preceded by production difficulty, as reflected in fluency and speech rate. We also find that this production difficulty affects speakers' constituent order preferences during grammatical encoding. We discuss our results and previous works to isolate the properties of other paradigms that resulted in facilitatory or inhibitory results. The data from our paradigm also speak to questions about the scope of phonological planning in unscripted speech and as to whether phonological and grammatical encoding interact.