Hurricanes in the South were among the main reasons behind a slide in home construction for the month
US housing starts sank to their lowest pace for three months in October, sliding by 3.1% as the overall sluggish home construction outlook showed little sign of improving.
Government data released Tuesday indicated housing starts had fallen to an annualized rate of 1.31 million, spurred in large part by a big decline in the South due to the impact of hurricanes Helene and Milton.
Many builders in the region put off or abandoned projects in the aftermath of those storms, with Southern housing starts plunging by 8.8% in October.
Across the country, the pace of single-family housing starts fell by 7% compared with September and 0.5% on a year-over-year basis, while single-family permits – a key indicator of future home construction – saw a slight uptick of 0.5%.
Homebuilder sentiment may be on the rise across the country, but an upward trend in mortgage rates since October could further weigh down on the overall construction outlook, according to First American deputy chief economist Odeta Kushi.
Writing shortly after the government release, Kushi noted that builders “continue to face headwinds” such as high construction costs and an acute shortage of skilled labor.
HOUSING STARTS: Housing starts fell 3.1% in October to an annual rate of 1.311 million, 4% lower than a year ago. Single-family home starts were down 6.9% to an annual rate of 970,000, flat from a year ago. Home building permits were flat in October. #realestate #economy pic.twitter.com/Dnd9QvysX7
— NAHB 🏠 (@NAHBhome) November 19, 2024
Are there positive signs on the horizon for US homebuilding?
Still, Kushi also sees an upside for the housing picture. “Demand for new homes remains a bright spot in the broader housing market, contrasting sharply with weakness in existing-home sales,” she said. “Builders’ ability to offer incentives and higher inventory of new homes for sale supports this relative strength.”
Despite the construction sector’s current torpor, Kushi said she expected a “steady” increase in single-family home construction in 2025, “bolstered by modest declines in financing costs for builders and buyers and by the scarcity of existing homes due to the ongoing mortgage rate lock-in effect.”
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