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U.S. single-family housing starts flat in October: NAHB

Single-family construction held steady in October as high mortgage rates depressed demand but more buyers turned to new homes because of a lack of existing inventory.

Overall housing starts increased 1.9 per cent in October to a seasonally adjusted annual rate of 1.37 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The October reading of 1.37 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 0.2 per cent to a 970,000 seasonally adjusted annual rate. However, single-family starts are down 10.6 per cent year-to-date. The multifamily sector, which includes apartment buildings and condos, increased 6.3 per cent to an annualized 402,000 pace.

“Despite higher interest rates in October, the lack of existing home inventory supported demand for new construction in the fall,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala. “Builders continue to grapple with elevated construction costs and growing concerns about regulatory costs.”

“The construction data in October continue to reflect that despite multidecade lows for housing affordability, the market continues to lack attainable inventory that only the home building industry can provide,” said NAHB chief economist Robert Dietz. “And with the 10-year Treasury rate now back in the 4.5 per cent range, we are forecasting gains for single-family home building in the months ahead and an outright gain for construction in 2024.”

On a regional and year-to-date basis, combined single-family and multifamily starts are 22 per cent lower in the Northeast, 11.2 per cent lower in the Midwest, 7.8 per cent lower in the South and 15.3 per cent lower in the West.

Overall permits increased 1.1 per cent to a 1.49 million unit annualized rate in October. Single-family permits increased 0.5 per cent to a 968,000 unit rate. However, single-family permits are down 10.6 per cent year-to-date. Multifamily permits increased 2.2 per cent to an annualized 519,000 pace.

Looking at regional permit data on a year-to-date basis, permits are 19.5 per cent lower in the Northeast, 16.7 per cent lower in the Midwest, 11.3 per cent lower in the South and 15.8 per cent lower in the West.

There are currently 669,000 single-family homes under construction, down almost 15 per cent from a year ago. In contrast, there are more than one million apartments under construction, near the highest total since 1973.