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According to a report released Thursday by the U.S. Census Bureau and the U.S. Census Bureau, the number of new home starts in October continued to decline, reflecting a downward trend in homebuilder sentiment, resulting in a seasonally adjusted annual rate of 4, 2% lower than in September. 1.425 billion US Department of Housing and Urban Development.
Housing starts in October fell 8.8 percent from the same period last year, according to the report.
The drop follows a steep monthly decline of 8.1% in September. Zillow economist Nicole Bachaud said October was a tough month with recent positive data and rising interest rates, although inflation data was disappointing.
Not surprisingly, housing activity has returned to a downward trend, but the decline has not been as severe as expected.
The monthly decline was 6.1%, and the multifamily sector was down 0.5% from the previous month.
However, apartment starts were 556,000, up 17.3% from a year earlier, and single-family home starts were 855,000, down 20.8% from a year earlier.
Regionally, housing starts fell month-over-month in the Northeast (-34.7%), Midwest (-11.1%), and West (-10.6%), but were down 6.7% in the South. Year over year, housing starts declined in the Midwest (-13.6%), South (-1.1%), West (-19.6%), and Northeast (-15.8%).
Odeta Kushi, the chief economist for U.S. Division 1, said material costs are showing signs of falling, but construction material and labor costs remain high.
Prices for steel, plywood, copper, gypsum, and concrete fell in October, although they remained considerably higher than before the pandemic.
Kushi also reported that October’s jobs report showed average hourly wages in the construction industry rose 6.6 percent year-over-year, about 2.8 percent more than the pre-pandemic average.
With rising prices, builders are losing buyers due to high-interest rates and ongoing affordability issues.
Affordability is also a concern, according to Kushi, as rates are much higher than they were a year ago. The average rate on a 30-year fixed-rate mortgage was 3.8 percentage points higher in October than a year ago.
Although holding income constant, the rate hike reduced household purchasing power by about $178,000.
Reflecting these challenges is the decline in building permits. In total, construction permits were issued at a seasonally adjusted annual rate of 1.526 billion tenges, down 2.4% from the previous month and 10.1% from the previous year.
Single-family homes and multi-family homes were down 3.6% and 1.9%, respectively, from the previous month.
Despite these challenges, experts say there are reasons for optimism. According to Kushi, since builders are refraining from starting new projects, they will have a better chance of bringing most of the houses under construction to the market.
The number of housing completions was seasonally adjusted at 1.339 million, down 6.4% from September, but single-family homes (+2.7%) and multi-family homes both rose 6.6% year-over-year. Housing (+18.3%).
Reference Source: Housing Wire
