Housing starts decreased 4.2% in Oct., with a larger dip in single-family home starts (down 6.1%) offset by a smaller dip in multifamily starts (down 1.2%).
WASHINGTON – Elevated mortgage rates, high construction costs for concrete and other building materials, and weakening buyer demand in the face of rising mortgage rates continued to drag down single-family housing production.
In October, overall housing starts decreased 4.2% to a seasonally adjusted annual rate of 1.43 million units, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The 1.43 million represents the number of housing units per year if the number remains constant for 12 months.
Within this overall number, single-family starts decreased 6.1% to an 855,000 seasonally adjusted annual rate. Year-to-date, single-family starts are down 7.1%. The multifamily sector, which includes apartment buildings and condos, decreased 1.2% to an annualized 570,000 pace.
“Builders are slowing construction as demand retreats due to high mortgage rates, stubbornly elevated construction costs and declines for housing affordability,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB).
“This will be the first year since 2011 to post a calendar-year decline for single-family starts,” says NAHB Chief Economist Robert Dietz. “We are forecasting additional declines for single-family construction in 2023, which means economic slowing will expand from the residential construction market into the rest of the economy.”
On a regional and year-to-date basis, combined single-family and multifamily starts are 2.9% higher in the Northeast, 1.5% lower in the Midwest, 2.6% higher in the South – the area that includes Florida – and 5.1% lower in the West.
Overall permits decreased 2.4% to a 1.53 million unit annualized rate in October. Single-family permits decreased 3.6% to an 839,000 unit rate. Multifamily permits decreased 1.0% to an annualized 687,000 pace.
Looking at regional permit data – a sign of future activity – on a year-to-date basis, permits are 2.8% lower in the Northeast, 0.2% higher in the Midwest, 1.1% higher in the South and 4.0% lower in the West.
Multifamily units under construction climbed again in October to 928,000, the highest tally since December 1973.
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