U.S. housing starts fell 8.1% to a seasonally adjusted annual rate of 1.439 million units in September, while single-family home projects dropped 4.7% to an annual rate of 892,000, the lowest level since May 2020, Reuters reports. As mortgage rates reached a 20-year high and supply chain disruptions posed extended challenges for builders, permits issued for new single-family houses fell 3.1% in September to the lowest level recorded since June 2020.
Buyers facing a series of affordability hurdles are driving down demand in the housing market, a slower pace of new construction signals a shift in builder sentiment in response.
"We expect starts to moderate further in (the fourth quarter) to ... 1.420 million from 1.461 million" in the third quarter, Nancy Vanden Houten, lead U.S. economist at Oxford Economics, wrote. "The risk, however, is for a slower pace of starts, given the weak handoff at the end of Q3 and pessimism among homebuilders who are seeing buyers retreat to the sidelines at a time when they continue to face elevated cost pressures."
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