U.S. single-family production continues to weaken in September: NAHB
October 19, 2022 By National Association of Home Builders
Single-family housing starts declined further in September as high mortgage rates, ongoing building material production disruptions and flagging demand stemming from rising affordability challenges continue to put a damper on new home production.
Overall housing starts decreased 8.1 per cent to a seasonally adjusted annual rate of 1.44 million units in September, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The September reading of 1.44 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 decreased 4.7 per cent to an 892,000 seasonally adjusted annual rate. Year-to-date, single-family starts are down 5.6 per cent. The multifamily sector, which includes apartment buildings and condos, decreased 13.2 per cent to an annualized 547,000 pace.
“Higher interest rates are hurting the ability of buyers to purchase a new home, particularly at the entry-level end of the market,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Savannah, Ga. “Higher rates also harm the supply-side of the market by increasing the cost of construction and development loans.”
“The ongoing decline for single-family construction mirrors weakness for single-family builder sentiment, which has now declined for 10 straight months and stands at half the level of a year ago,” said NAHB chief economist Robert Dietz. “The September single-family production level is below a 900,000 annualized rate and the lowest level since May 2020.”
On a regional and year-to-date basis, combined single-family and multifamily starts are 3.9 per cent higher in the Northeast, 1.2 per cent lower in the Midwest, 3.6 per cent higher in the South and 3.4 per cent lower in the West.
Overall permits increased 1.4 per cent to a 1.56 million unit annualized rate in September and are up 0.3 per cent on a year-to-date basis. Single-family permits decreased 3.1 per cent to an 872,000 unit rate. The pace of single-family permits has now declined for seven consecutive months. Multifamily permits increased 7.8 per cent to an annualized 692,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 2.8 per cent lower in the Northeast, 1.5 per cent higher in the Midwest, 1.4 per cent higher in the South and 1.6 per cent lower in the West.
The number of single-family homes under construction—800,000—is slowing due to prior declines for starts.
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