Housing starts move forward in September
Despite mortgage rates hovering around 7% or better, the housing market moved ahead in September.
Housing starts in September were at a seasonally adjusted annual rate of 1.358 million, rising 7% from the revised August estimate of 1.269 million.
But the latest figure, released jointly this morning by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, is 7.2% below the September 2022 rate of 1.463 million.
Single‐family housing starts demonstrated gains in September, increasing 3.2% to a rate of 963,000 compared to the revised August figure of 933,000.
The September rate for units in buildings with five units or more jumped 17.1% to a rate of 383,000 from 327,000 in the prior month.
“The uptick in single-family production was somewhat unexpected as our latest builder surveys indicate that starts are likely to weaken in the months ahead due to recent higher mortgage rates that were near 7.6% in mid-October,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala. “Meanwhile, builders also continue to face persistent labor shortages, a lack of buildable lots, and higher financing costs for acquisition and development loans.”
Combined housing permits for the month fell by 4.4% to a seasonally adjusted annual rate of 1.473 from a revised August rate of 1,541 million. The latest number is also 7.2% below the September 2022 rate of 1.588 million.
Single-family permits saw growth of 1.8%, moving to a rate of 965,000 in comparison to the revised August figure of 948,000.
Permits for buildings with five units or more were at a rate of 459,000 in September, dropping 14% from a rate of 534,000 in the prior month.
“Despite ongoing challenges in the market, the housing deficit of resale inventory continues to provide some market support for builders,” said NAHB Chief Economist Robert Dietz. “Because of a lack of existing homes in the marketplace, 31% of homes available for sale in August were new construction. This compares with a historical average in the 12-14% range. But in another sign that higher interest rates have slowed the market, the number of single-family homes under construction in September was 674,000, which is almost 15% lower than a year ago.”
Here's how residential construction performed on a regional basis in September:
- In the Northeast, combined starts tumbled by 24.5% compared to the prior month as single-family starts dropped 19%. Permits decreased by 11.7% while single-family permits were flat for the month.
- Starts in the Midwest jumped by 35.3% as single-family starts grew by 14.2%. Permits were down by 9.1% as single-family permits ticked downward by 0.8%.
- The South saw total starts rise by 6.5% as single-family starts moved ahead by 2.8%. Permits dipped by 2% as single-family permits declined 3.1%.
- Total starts in the West increased by 5.6% as single-family starts rose by 5.2%. Permits diminished by 4.8% for the month as single-family permits were flat.
