Single-family housing starts rebounded in September after reaching their lowest levels since summer 2020 in August. Single-family starts increased 3.2% month over month to a rate of 963,000 last month, according to the U.S. Census Bureau and the Department of Housing and Urban Development.
Privately owned housing starts, including multifamily and single-family homes, increased 7% month over month to a seasonally adjusted annual rate of 1,358,000. The September figure still remains 7.2% below the starts pace in September 2022.
“Even while rates climbed and affordability waned throughout September, builders continued to push forward with construction,” says Nik Scoolis, manager, housing economics, for Zonda. “Single-family starts activity climbed again from a down August to the third-highest level in the last 12 months on a seasonally adjusted annualized basis.”
Privately owned housing completions in September increased 6.6% month over month to an annualized rate of 1,453,000. The seasonally adjusted annualized rate in September was also 1% higher than a year ago. Single-family completions increased 5.3% from August to 998,000.
However, while starts and completions figures rebounded, forward-looking data relating to building permits indicated a potential impact of higher rates. Privately owned housing units authorized by building permits decreased 4.4% month over month and 7.2% year over year to a seasonally adjusted annualized rate of 1,473,000. Single-family permit authorizations increased 1.8% from August to 965,000 in September.
“Both total permit activity and authorized but not yet started units declined year over year,” says Scoolis. “As borrowing costs and finances remain elevated throughout the end of the year, it will be important that builders can continue to bring supply to a market that desperately needs it.”
The declines in permit activity complements survey data from the NAHB/Wells Fargo Housing Market Index released this week, which indicated builder confidence in the single-family market continues to decline. High mortgage rates were cited by builders as a factor impacting buyer demand as well as the cost and availability of builder development and construction loans on the supply side.
The September HMI indicated a decline in builder perception of current sales conditions, sales expectations in the next six months, and prospective buyer traffic.