Housing Market

Housing starts and permits rose moderately in October

The pace of new single-family construction continues to surpass last year’s level

Housing starts surprised in October. They rose to a seasonally adjusted annual rate of 1,372,000, the highest in three months, according to the U.S. Department of Housing and Urban Development and U.S. Census Bureau data. It’s a 1.9% gain from the revised September estimate of 1,346,000 and 4.2% below the October 2022 rate of 1,432,000.

Permits for future construction also jumped 1.1% from September. Indeed, privately‐owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,487,000, up from 1,471,000 in September.

Builder confidence declined again on Thursday for the fourth consecutive month as elevated mortgage rates have dampened homebuyer demand. Higher interest rates have also hindered financing possibilities for new housing projects. 

Overall, single‐family housing starts in October came in at a rate of 970,000, which is 0.2% above the revised September figure of 968,000. It also surpassed last year’s level, according to Bright MLS Chief Economist Lisa Sturtevant. Meanwhile, the housing starts rate for units in buildings with five units or more, dropped slightly in October to 382,000 from 383,000 in September. 

Single-family permits increased (+0.5%) to 968,000 in October, up from 963,000 in September.  Multifamily permits came in at 469,000, an encouraging uptick from September’s 459,000. Completed homes fell to seasonally adjusted annual rate 1,410,000, a 4.6% drop from the prior month but 4.6% above the October 2022 level. 

The Midwest and the West posted the strongest homebuilding activity in October. The Northeast did not perform as well as weather, supply chain issues, and difficulties getting permits hampered construction.

However, “there may be some bright spots for homebuilders in the months to come,” Sturtevant said.

“A good inflation report and steadily declining mortgage rates provide some relief to the market,” she said. “At the same time, there are still many individuals and families who want to buy a home but who are waiting for more supply.”

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