Builders
started construction of privately-owned housing units
in September at a seasonally adjusted annual rate (SAAR) of 1,439,000 units
(1.475 million expected). This
is 8.1% (±14.9%)* below the revised August estimate of 1,566,000 (originally 1.575
million units) and 7.7% (±11.5%)* below the September 2021 SAAR of 1,559,000
units; the not-seasonally adjusted YoY change (shown in the table above) was -8.0%.
Single-family
housing starts in September were at a rate of 892,000; this is 4.7% (±10.7%)*
below the revised August figure of 936,000 units (-19.4% YoY). Multi-family:
547,000 units (-13.2% MoM; +17.5% YoY).
* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.
Total
completions were at a SAAR of 1,427,000.
This is 6.1% (±11.0%)* above the revised August estimate of 1,345,000 (originally
1.342 million units) and 15.7% (±13.1%) above the September 2021 SAAR of
1,233,000 units; the NSA comparison: +16.2% YoY.
Single-family housing completions were at a rate of 1,049,000; this is 3.2% (±8.8%)* above the revised August rate of 1,016,000 units (+11.6% YoY). Multi-family: 378,000 units (+14.9% MoM; +31.3% YoY).
Total
permits were at a SAAR of 1,564,000 units (1.550 million expected). This is 1.4%
above the revised August rate of 1,542,000 but 3.2% below the September 2021 SAAR
of 1,615,000 units; the NSA comparison: -4.8% YoY.
Single-family permits were at a SAAR of 872,000; this is 3.1% below the revised August figure of 900,000 units (-19.6% YoY). Multi-family: 692,000 units (+7.8% MoM; +22.3% YoY).
In
a further signal that rising interest rates, building material bottlenecks and
elevated home prices continue to weaken the housing market, builder sentiment
fell for the tenth straight month in October and traffic of prospective buyers
fell to its lowest level since 2012 (excluding the two-month period in the spring
of 2020 at the beginning of the pandemic).
Builder
confidence in the market for newly built single-family homes dropped eight
points in October to 38 -- half the level it was just six months ago -- according
to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market
Index (HMI). This is the lowest confidence reading since August 2012 apart from
the onset of the pandemic in the spring of 2020.
“High
mortgage rates approaching 7% have significantly weakened demand, particularly
for first-time and first-generation prospective home buyers,” said NAHB
Chairman Jerry
Konter. “This situation is unhealthy and unsustainable. Policymakers must
address this worsening housing affordability crisis.”
“This
will be the first year since 2011 to see a decline for single-family starts,”
said NAHB Chief Economist Robert Dietz. “And given expectations for ongoing
elevated interest rates due to actions by the Federal Reserve, 2023 is forecasted
to see additional single-family building declines as the housing contraction
continues. While some analysts have suggested that the housing market is now
more ‘balanced,’ the truth is that the homeownership rate will decline in the
quarters ahead as higher interest rates and ongoing elevated construction costs
continue to price out a large number of prospective buyers.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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