Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
Single-family home construction in the U.S. dropped 6.9% in October 2024 to an annualized rate of 970,000 units, affected by Hurricanes Helene and Milton in the South and persistently high mortgage rates. While multifamily starts rose 9.8%, overall housing starts fell 3.1% month-on-month. New housing supply remains constrained, with inventory levels similar to 2008, as rising borrowing costs continue to challenge affordability. Builders are prioritizing clearing backlogs, but experts warn that high rates may limit recovery, keeping the housing market under pressure in the near term.
U.S. single-family home construction saw a significant decline in October 2024, falling by 6.9% to an annualized rate of 970,000 units, according to the Commerce Department. The decline is attributed to the combined effects of Hurricanes Helene and Milton in the South and ongoing challenges posed by elevated mortgage rates. Despite a slight increase in building permits, the anticipated recovery in residential construction remains muted as affordability and supply issues persist. Advertisement
The densely populated South, hit hard by Hurricanes Helene in September and Milton in October, experienced a 10.2% drop in single-family housing starts. The Northeast reported an even steeper decline of 28.7%, while the Midwest and West showed marginal gains of 4.6%. Overall housing starts fell 3.1% month-on-month to 1.311 million units, with single-family starts slipping 0.5% compared to the previous year.
The broader housing market continues to grapple with the effects of rising borrowing costs, following the Federal Reserve's interest rate hikes aimed at controlling inflation. While the Fed's recent rate cuts brought the key interest rate down to 3.75%, mortgage rates remain high due to elevated 10-year Treasury yields.
Multifamily housing, however, provided a silver lining, with rents increasing by 9.8% to an annualized pace of 326,000 units. Despite this growth, building permits for multifamily projects dropped 3% in October, signaling potential future challenges. Total permits for all housing types decreased by 0.6% to 1.416 million units, marking a 7.7% year-on-year decline.
New housing inventory remains constrained at levels last seen in 2008, driven by a shortage of entry-level homes in the resale market. Most homeowners locked into mortgage rates below 4% have little incentive to sell, further pressuring supply. This imbalance has kept demand for new housing relatively strong despite higher borrowing costs.
"Builders are focused on clearing backlogs of ongoing projects while grappling with affordability challenges for buyers," noted Daniel Vielhaber, an economist at Nationwide. "With mortgage rates still elevated, new construction could stagnate in the coming months."
As of October, the rate of single-family completions dropped by 1.4% to 986,000 units, while overall housing completions declined 4.4% to 1.614 million units. While builders are progressing on backlogged projects, the inventory of single-family homes under construction remained unchanged at 644,000 units.
Looking ahead, experts anticipate that high mortgage rates and constrained inventory will keep the housing market under pressure, with limited short-term improvements expected in affordability or supply.
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
