New residential construction missed analyst estimates in September, falling 8.1% month over month to an annual rate 1,439,000 homes, as both single-family and multifamily starts decreased from August’s pace, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said in a press release.
New construction of single-family homes fell 4.7% from August’s revised annual estimate to 892,000, while multifamily starts surged 13.1% to 530,000. On a yearly basis, the rate of single-family starts was down 18.5%, while multifamily rose 16.5%.
“There is a clear long-term need for more new housing after a decade-plus of lackluster homebuilding activity insufficient to keep up with a growing population, and a prolonged pullback in building activity now would represent a missed opportunity to address those long-term needs,” Compass president of national brokerage operations Neda Navab said. “Finding the right balance between prudent, short-term caution and obvious long-term need won’t be easy for builders, but will be necessary to ensure the ongoing supply/demand imbalance we’re experiencing today can ease somewhat tomorrow.”
Permits, a leading indicator of future new-home supply, were up 1.4% compared to August but down 3.2% from their year-ago rate.
“The decline in single-family permits and starts should come as no surprise, as homebuilder confidence declined for the 10th consecutive month in October, reaching its lowest level since August 2012, excluding spring of 2020,” First American deputy chief economist Odeta Kushi said. “The decline in homebuilder confidence comes on the heels of a jump in the average 30-year, fixed mortgage rate to nearly 7%, suggesting that the new-home market will continue to slow.”
Privately owned housing completions hit an annual rate of 1427,000 in September, up 6.1% from August and 15.7% from September 2021.