Demand for new construction fuels surge in US single-family homebuilding in September

Single-family homebuilding in the United States saw a strong rebound in September, driven by the demand for new construction amid a shortage of previously owned homes. However, the surge in mortgage rates, reaching the highest level in nearly 23 years, could potentially slow down the momentum.

According to the Commerce Department, single-family housing starts, which make up the majority of homebuilding, rose by 3.2% to a seasonally adjusted annual rate of 963,000 units last month. This figure was revised from the previously reported 933,000 units in August.

Mortgage finance agency Freddie Mac reported that the average rate on a 30-year fixed mortgage reached 7.31% in the last week of September, the highest since late 2000. This increase in mortgage rates reflects the rise in the yield on the benchmark 10-year Treasury note, which is currently at a 16-year high.


The National Association of Home Builders/Wells Fargo Housing Market Index revealed a decline in confidence among single-family homebuilders for the third consecutive month in October, dropping to a nine-month low. Builders reported lower levels of buyer traffic as a contributing factor. On the other hand, housing projects with five units or more experienced a significant surge of 17.1% to a rate of 383,000 units in September.

However, further growth may be limited due to restricted access to credit for builders and a large inventory of multi-family housing currently under construction. Overall, housing starts increased by 7.0% to a rate of 1.358 million units in September, slightly below the economists' forecast of 1.380 million units.

Permits for future construction of single-family homes also rose by 1.8% to a rate of 965,000 units. It is worth noting that residential investment has declined for nine consecutive quarters, marking the longest stretch since the burst of the housing market bubble, which triggered the 2008 global financial crisis and the subsequent Great Recession.