- Housing starts fell 0.5% in November
- Detached houses decreased by 4.1%.Condominiums +4.8%
- Building permits fell 11.2%. Decrease in detached houses 7.1%
WASHINGTON (Reuters) – U.S. single-family home construction fell to a 2-1/2-year low in November as rising mortgage rates continued to weigh on housing market activity, driving future building permits plummeting. did.
A pessimistic report from the Department of Commerce on Tuesday followed Monday’s news as confidence among homebuilders plummeted for a record 12 months in December.
This marked the seventh consecutive quarter of contraction in residential investment. This would be the longest period since the bursting of the housing bubble triggered the Great Recession. The housing market has bore the brunt of the fastest rate hike cycle by the Federal Reserve since his 1980s as the US central bank battles inflation.
“The Fed rate hikes are a given and they are exacerbating the recession in the housing market,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “There is no place for home builders to hide. I don’t know about the rest of the economy, but the housing market is clearly in recession.”
Single-family home starts, which account for the largest share of residential construction, fell 4.1% last month to a seasonally adjusted annual rate of 828,000 units. That was his lowest level since May 2020, when the economy was rocked by the first wave of the COVID-19 pandemic.
Outside of the pandemic plunge, single-family housing starts are at their weakest since February 2019. Single-family home construction declined in the South and Midwest, generally considered more affordable regions in the United States. Increased in the Northeast and West.
Housing starts of five or more units rose 4.8% to 584,000, the highest level since April.
Multifamily construction is being driven by strong demand for rental housing as rising mortgage rates are forcing many potential homebuyers to stay in rental housing.
Rates on 30-year fixed mortgages topped 7% a few months ago, the highest since 2002, according to data from mortgage lender Freddie Mac. Last week it dropped to an average of 6.31%, but a year ago he doubled.
Interest rates may start to rise after the US Federal Reserve (Fed) hinted at further interest rate hikes through the end of 2023 last week and US Treasury yields surged. Mortgage interest rates are linked to government bond yields.
Wall Street stocks were trading high. The dollar fell against a basket of currencies after the Bank of Japan stunned markets by revising its yield curve control policy and deciding to widen the trading range on 10-year government bond yields.
Monday’s data showed single-family homebuilder confidence fell further in November, with the National Association of Home Builders (NAHB)/Wells Fargo housing market index hitting its lowest level since June 2012. was pushed up to Spring 2020.
A surge in multifamily projects offset some of the drag from single-family housing units, resulting in overall housing starts falling just 0.5% last month to 1,427,000 units. Economists polled by Reuters had expected the number of starts to fall to 1.4 million.
The Federal Reserve is trying to slow inflation by lowering demand for everything from housing to labor. The labor market remains tight, but economists expect it to begin to loosen next year and eventually weaken, driven by the housing market.
The housing market contracted for the sixth straight quarter. Housing investment is expected to slash his 0.7 percentage points from gross domestic product this quarter.
Growth forecast for the fourth quarter reaches 2.8% annualized. Economic growth in the third quarter he was 2.9%.
“Housing is going to play a big role in any future slowdown in the job market,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “Homebuilding employment has remained virtually flat over the past six months after a rapid recovery from the pandemic.”
The single-family home market boomed early in the pandemic as Americans sought larger properties to house their home offices. The pendulum is now swinging in favor of apartments.
But cracks are beginning to appear in the apartment complex. Permits for housing projects of 5 units or more fell 17.9% to 509,000 units, the lowest level since May 2021. Single-family building permits fell 7.1% to 781,000 units, the lowest level since May 2020.
Overall, future housing permits plunged 11.2% last month to 1.342 million units, the lowest level since June 2020.
The number of approved units before the start of construction decreased by 2.0% to 293,000 units. The backlog of single-family homes fell by 3.4% to 143,000 units, while the completion rate for this segment rose by 9.5% to 1,047,000 units.
The inventory of single-family homes under construction fell 1.3% to 777,000 million units, the lowest level since December 2021.
Rising mortgage rates, combined with single-family home construction and declining inventories, could exacerbate existing housing shortages and slow home price declines, posing a challenge for the Fed. .
“Limited inventory supplied by both existing homeowners and homebuilders is tightening the market, minimizing price declines and increasing demand for desirable homes,” said Nicole Bachaud, economist at Giro. The competition will continue,” he said.
Reported by Lucia Mutikani.Edited by Paul Simao, Andrea Ricci and Jonathan Ortiz
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