Single-family Production Continues to Weaken in September
Single-family housing starts declined further in September as high mortgage rates, ongoing building material production disruptions and flagging demand stemming from rising affordability challenges continue to put a damper on new home production.
Overall housing starts decreased 8.1 percent to a seasonally adjusted annual rate of 1.44 million units in September, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The September reading of 1.44 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 4.7 percent to an 892,000 seasonally adjusted annual rate. Year-to-date, single-family starts are down 5.6 percent. The multifamily sector, which includes apartment buildings and condos, decreased 13.2 percent to an annualized 547,000 pace.
“Higher interest rates are hurting the ability of buyers to purchase a new home, particularly at the entry-level end of the market,” says Jerry Konter, chairman of the National Association of Home Builders. “Higher rates also harm the supply-side of the market by increasing the cost of construction and development loans.”
“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,” says Robert Dietz, NAHB chief economist. “The September single-family production level is below a 900,000 annualized rate and the lowest level since May 2020.”
Overall permits increased 1.4 percent to a 1.56 million unit annualized rate in September and are up 0.3 percent on a year-to-date basis. Single-family permits decreased 3.1 percent to an 872,000 unit rate. The pace of single-family permits has now declined for seven consecutive months. Multifamily permits increased 7.8 percent to an annualized 692,000 pace.
The number of single-family homes under construction—800,000—is slowing due to prior declines for starts.