According to the government, housing starts rose to a seasonally adjusted annual rate of 1.358 million units in September. U.S. Department of Housing and Urban Development and US Census Bureau data. This was a 7% increase from the August revised figure of 1,269,000, and 7.2% lower than the September 2022 figure of 1,463,000.
However, future construction permits recorded a 4.4% decline from August. In fact, the number of private residential units granted building permits in September was at a seasonally adjusted annual rate of 1,473,000, down from 1,541,000 in August.
“Despite last month’s rise, builders are increasingly worried about mortgage rates remaining high and demand cooling,” said Lisa Sturtevant, the firm’s chief economist. Bright MLSsaid in an emailed statement.
To boost sales, construction companies have offered a variety of concessions, including upgrades and mortgage interest buybacks.
The monthly Builder Confidence Index was released on Tuesday. The decline in confidence was the largest since January 2023.
Overall, single-family housing starts rose to 963,000 in August, 3.2% higher than the revised August figure of 933,000. However, due to the impact of rising interest rates, it fell by 12.8% compared to September 2022. Meanwhile, housing starts for buildings with five or more units increased to 383,000 units.
The number of single-family home permits rose to 965,000 in September (up 1.8%), but was still down 13.4% compared to the same period last year. Meanwhile, the number of condominium permits was 459,000, a significant decrease from August and a 14.3% decrease compared to September 2022. Completed housing increased by 6.6% month-on-month and was 1% above the September 2022 level.
Regional breakdown
Sturtevant noted that single-family home starts were down in the Northeast month-over-month, but remained strong in the rest of the country.
“The slowdown in construction activity in the Northeast may reflect not only a cooling in demand, but also the challenges builders face in finding vacant land,” she said.
However, on a year-to-date basis, the number of single-family and multifamily housing starts has decreased nationwide. It was 23.3% lower in the Northeast, 12.9% lower in the Midwest, 7.8% lower in the South and 16.9% lower in the West, according to the report. National Home Builders Association.
Is it possible that construction of multifamily housing will stall?
Multifamily construction was strong in August and September, which bodes well for rental inventory. In many U.S. markets, rising mortgage rates are making renting rather than buying a financially sound decision. But if the pace of new apartment construction slows in the fourth quarter, Sturtevant cautions that the relief some renters are feeling may be only temporary.
