The number of new home starts in the US fell in September, and the number of multi-family housing starts fell to a four-month low

The Zhitong Finance App learned that new housing starts in the US slowed in September, and the decline in multi-family housing projects offset the increase in single-family housing construction.

According to government data released on Friday, after a sharp rebound in August, the number of new housing starts fell 0.5% in September to an annual rate of 1.354 million units, which is expected to be 1.35 million units.

The number of single-family housing starts increased 2.7% to 1.03 million units per annum, the highest level in five months. The number of multi-family housing starts fell 9.4% to a four-month low.

Construction permits, which measure future construction starts, fell 2.9% to an annual rate of 1.43 million units. Single-family residential construction permits increased by 0.3% to 970,000 units.

Despite an increase in the number of single-family housing starts, this ratio is still below the crazy rate at the end of 2021 and the beginning of 2022, when mortgage interest rates were close to 3%, and the historic lack of existing homes for sale boosted demand for new homes.

However, after the Federal Reserve raised interest rates to their highest level in 20 years, demand weakened, eventually bringing homebuilders' supply of new homes to the highest level in 16 years.

Housing construction had the biggest impact on third-quarter gross domestic product (GDP) since 2022. Prior to the data release, the Atlanta Federal Reserve's GDPNow forecast showed that residential investment would fall 0.43 percentage points after a 0.11 percentage point decline in the second quarter.

By region, the operating rate of single-family housing increased in two of the four regions. Among them, the southern region increased 6.6%, reaching the highest point in five months, and the northeastern region increased 10.6%.

With the recent recovery in mortgage interest rates, which hit a two-year low in mid-September, a continued housing recovery will take time. Despite this, after the Federal Reserve cut interest rates by 50 basis points last month, builders were optimistic about the prospects for lower housing financing costs during a recent earnings call.

BMO Capital Markets senior economist Sal Guatieri said in a report: “As affordability remains an urgent issue in many regions, housing construction may stall until the Federal Reserve enters an easing cycle and mortgage interest rates drop another percentage point.”

KB Home CEO Jeffrey Mezger said that lower borrowing costs should revitalize the resale market, which will lead to stronger demand for new homes.

According to the new housing commencement report, the number of new single-family homes completed dropped by 5.7%, equivalent to an annual rate of 1.68 million units, while the number of construction projects dropped by nearly 2%, to the lowest point in nearly three years.

New housing construction data fluctuates greatly. The government report shows that 90% of people believe the monthly change is between a 13.5% decrease and a 12.5% increase.