US housing starts slide to 1.221 million in September as high mortgage rates sap demand
US housing starts fell 5.2% to a 1.221 million annual rate in September, missing forecasts, as 7.40% mortgage rates and slumping builder confidence weigh on homebuilding.
US homebuilding stumbled in September as elevated mortgage rates kept buyers on the sidelines. Privately owned housing starts fell 5.2 per cent from August to a seasonally adjusted annual rate of 1.221 million, the Census Bureau said on Tuesday, undershooting economists’ expectations of about 1.30 million and a 2.0 per cent monthly gain (Reuters, WSJ).
Single-family starts — the bulk of homebuilding — dropped 4.6 per cent to an 859,000 pace, the lowest in a year, while construction of buildings with five or more units fell nearly 7 per cent to about 349,000 (Calculated Risk, The Edge Singapore).
Permits for future construction offered little relief: total permits edged down 0.2 per cent to 1.40 million, but single-family permits slid 4.0 per cent to 845,000 — the weakest since early 2023. Total starts were down 7.4 per cent on a year earlier.
The market is being squeezed by affordability. The average 30-year fixed mortgage rate hit 7.40 per cent last week, the highest in nearly three years, Freddie Mac data showed, and a National Association of Home Builders survey released on Monday showed builder sentiment plunging in October to its lowest since June 2012.
Residential investment has dragged on economic growth in five of the last six quarters, and the Atlanta Fed’s GDPNow model had pencilled in a 1.3 per cent annualised decline in residential investment for the third quarter before the report. Housing affordability is shaping up as a major issue ahead of the November 3 midterm election.
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