Builders
started construction of privately-owned housing units
in September at a seasonally adjusted annual rate (SAAR) of 1,358,000 units (1.394
million expected).
This is 7.0% (±15.8%)* above the revised August estimate of 1,269,000
(originally 1.283 million units), but 7.2% (±12.1%)* below the September 2022 SAAR
of 1,463,000 units; the not-seasonally adjusted YoY change (shown in the table
above) was -7.7%.
Single-family
housing starts in September were at a rate of 963,000; this is 3.2% (±10.8%)*
above the revised August figure of 933,000 units (+9.2% YoY). Multi-family: 395,000
units (+17.6% MoM; -32.7% 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 1,453,000 units. This is 6.6% (±10.2%)* above the
revised August estimate of 1,363,000 (originally 1.406 million units) and 1.0%
(±13.7%)* above the September 2022 SAAR of 1,438,000 units; the NSA comparison:
+1.7% YoY.
Single-family completions were at a SAAR of 998,000; this is 5.3% (±11.2%)* above the revised August rate of 948,000 units (-4.7% YoY). Multi-family: 455,000 units (+9.6% MoM; +19.4% YoY).
Total
permits were at a SAAR of 1,473,000 units (1.450 million expected). This is 4.4%
below the revised August rate of 1,541,000 (originally 1.543 million units) and
7.2% below the September 2022 SAAR of 1,588,000 units; the NSA comparison: -12.2%
YoY.
Single-family permits were at a SAAR of 965,000; this is 1.8% above the revised August figure of 948,000 units (+6.7% YoY). Multi-family: 508,000 units (-14.3% MoM; -34.4% YoY).
Press
release from NAHB’s Robert Dietz:
“Stubbornly
high mortgage rates that have climbed to a 23-year high and have remained above
7% for the past two months continue to take a heavy toll on builder confidence,
as sentiment levels have dropped to the lowest point since January 2023.
“Builder
confidence in the market for newly built single-family homes in October fell
four points to 40 from a downwardly revised September reading, according to the
National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index
(HMI). This is the third consecutive monthly drop in builder confidence.
“Buyers
continue to be priced out of the market at these levels of interest rates,
particularly younger households. Additionally, elevated rates are also
increasing the cost and decreasing the availability of builder development and
construction loans, which harms supply and contributes to lower housing
affordability.
“Since
late September, mortgage rates are up nearly 40 basis points to 7.57%,
according to Freddie Mac. Interest rates have increased on the Federal
Reserve’s apparent higher-for-longer monetary policy stance, better than
expected macro growth during the third quarter and longer-term concerns over
government budget deficits.
“The
housing affordability crisis can only be solved by adding additional
attainable, affordable supply. Boosting housing production would help reduce
the shelter inflation component that was responsible for more than half of the
overall Consumer Price Index increase in September and aid the Fed’s mission to
bring inflation back down to 2%.
However, uncertainty regarding monetary policy is contributing to
affordability challenges in the market.
“As
a result of the extended high interest environment, many builders continue to
reduce home prices to boost sales. In October, 32% of builders reported cutting
home prices, unchanged from the previous month but still the highest rate since
December 2022 (35%). The average price discount remains at 6%. Meanwhile, 62%
of builders provided sales incentives of all forms in October, up from 59% in
September and tied with the previous high for this cycle set in December 2022.”
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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