Housing starts drop in September
After a surprising increase in August, housing starts receded again in September.
Privately-owned housing starts in September decreased 8.1% to a seasonally adjusted rate of 1.439 million, U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported this morning.
Total starts are also 7.7% below the September 2021 rate of 1.559 million.
Single-family housing starts in September were at a rate of 892,000, falling 4.7% from the revised August rate of 936,000.
The rate for units in buildings with five units or more was 530,000, a 13.1% drop from the revised August rate of 610,000.
The National Association of Home Builders (NAHB) continues to attribute declines in housing starts to affordability and supply chain challenges.
“Higher interest rates are hurting the ability of buyers to purchase a new home, particularly at the entry-level end of the market,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Savannah, Ga. “Higher rates also harm the supply-side of the market by increasing the cost of construction and development loans.”
Building permits, a sign of what’s to come in the housing market, increased 1.4% to a seasonally adjusted annual rate of 1.564 million. The latest number is 3.2% below the September 2021 rate of 1.615 million.
Single-family permits fell 3.1% in September to a rate of 872,000 compared to the revised August figure of 900,000. Authorizations of units in buildings with five units or more were at a rate of 644,000 in September, down 8.2% from the prior month.
This report follows the latest NAHB/Wells Fargo Housing Market Index, which measures home builder confidence. Released yesterday, the index dropped to its lowest level since 2012. The latest HMI reading also marked 10 straight months of declines for home builder sentiment.
“The ongoing decline for single-family construction mirrors weakness for single-family builder sentiment, which has now declined for 10 straight months and stands at half the level of a year ago,” said NAHB Chief Economist Robert Dietz. “The September single-family production level is below a 900,000 annualized rate and the lowest level since May 2020.”
Here’s how housing starts and permits performed regionally on a month-over-month basis:
- In the Northeast, total starts dropped 12.5% as single-family starts declined 6.5%. Combined permits were down 9.4% but single-family permits rose 3.6%.
- In the Midwest, total starts dipped 2.7% as single-family starts fell 13.8%. Total permits climbed 4% while single-family permits edged downward by 1.8%.
- In the South, total starts decreased 13.7% but single-family starts increased 2.5%. Overall permits saw a 3.1% rise as single-family permits slipped 2%.
- In the West, total starts moved ahead 4.5% while single-family starts dropped 15.8%. Permits were nearly flat, seeing a slight 0.3% increase while single-family permits declined 8.8%.
