US single-family housing starts, building permits tumble in September
SPY•US single-family housing starts fell 4.6% to an annual rate of 859,000 units in September, while permits dropped 4.0% to 845,000. The declines came as the 30-year fixed mortgage rate averaged 7.40% last week, its highest level in nearly three years.
1. Starts and permits fall
Single-family housing starts fell 4.6% in September to a seasonally adjusted annual rate of 859,000 units, and permits for future construction decreased 4.0% to 845,000. Higher mortgage rates suppressed demand, suggesting residential investment resumed its declining trend in the third quarter.
2. Builders face headwinds
The 30-year fixed mortgage rate averaged 7.40% last week, the highest level in nearly three years. Homebuilder sentiment fell in October to its lowest level since June 2012, with the National Association of Home Builders citing rising material costs and mortgage rates, more expensive diesel, and worsening labor conditions.
3. Housing market context
Slumping sales have contributed to a glut of unsold new homes, reducing developers’ incentive to start projects, although a national housing shortage is keeping home prices elevated. Residential investment rebounded in the second quarter after five straight quarterly declines, making a small contribution to gross domestic product.
