The number of housing units that came online in September showed a big year-over-year jump, but data on earlier stages of construction suggest not much is coming through the pipeline.
That’s according to monthly data on new residential construction from the U.S. Census Bureau, which shows year-over-year declines in building permits (-5.7%) and housing starts (-0.7%). But housing completions rose 14.6% compared to September 2023.
Single-family construction in earlier stages of construction are a bright spot in the data, with permits for one-unit housing rising 0.3% compared to August, while single-family housing starts rose 2.7% month over month.
But with mortgage rates rising again and home prices continuing to hit all-time highs, the data doesn’t suggest relief for homebuyers is coming anytime soon.
“More new construction is essential for easing the housing affordability challenge,” Bright MLS chief economist Lisa Sturtevant said in a statement. “Housing affordability has been elevated to the national level during the presidential campaign, bringing more attention to the issue. However, the federal government simply does not have a lot of influence over the factors that drive housing affordability.”
One major caveat to the housing starts numbers is that the Northeast registered an eye-popping 77.4% increase over the past year, while the other three regions registered more tempered numbers. Starts in the Midwest rose 3.5% year over year, while the South rose 1.9% and the West dropped 0.9%.
“While single-family home building increased in September, higher mortgage interest rates in October are likely to place a damper on growth in next month’s data,” Robert Dietz, chief economist for the National Association of Home Builders, said in a statement. “Nonetheless, NAHB is forecasting a gradual, if uneven, decline for mortgage rates in the coming quarters, with corresponding increases for single-family construction. Multifamily construction will remain weak as completions of apartments are elevated.”
