U.S. single-family homebuilding rebounded in September. This was due to increased demand for new construction, driven by a housing shortage. That said, mortgage rates hit a 23-year high, and MBA reported that mortgage app volume hit its lowest level since 1995.
Despite this, the increase brought a partial recovery from August’s housing starts decline.
The rebound is likely due to permits approved months ago before mortgage rates surpassed 7%. According to a survey this week, homebuilder confidence dropped to a nine-month low in October. Builders reported reduced levels of traffic.
Housing starts increased 3.2% in Midwest, West, and South but plunged 19% in Northeast. Overall housing starts accelerated 7%. But multi-family building permits dropped 14%.
“The under-construction pipeline remains extremely elevated relative to historical averages, suggesting that a backlog of inventory will be coming to market in the next few months and years,” said Colin Johanson, an economist at Barclays in New York. “This backlog, once in the market, could help alleviate price pressures, although this remains to be seen until the under-construction number begins to show consistent declines.”
Follow NEXT on LinkedIn for the latest industry news and executive intel.
