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Housing starts and permits drop in October

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US home construction fell more than expected in October, but single-family permits fell. This is another sign that home builders are reluctant to stock up as many buyers are being pushed out of the market.

Housing starts, including both single-family and multifamily housing, fell 4.2% last month to an annualized rate of 1.425 million. government data released ThursdayEconomists surveyed by Bloomberg had forecast a 2.0% decline.

Single-family home construction fell 6.1% to an annualized rate of 855,000 units. Construction of multi-family dwellings also declined.

application to build — indicator of expected future activity — down 2.4% The annual rate increased to 1.526 million units in October from 1.564 million units the previous month. Still, this beats Bloomberg’s consensus forecast of 1.515 million. Permits to build single-family homes he dropped to 839,000 units in October.

Although there are signs that inflation will ease further in the coming months, housing activity remains subdued as the Federal Reserve (Fed) pushes to tackle steeper inflation. Efforts by central banks have made borrowing costs, including mortgages, increasingly expensive, increasing the risk of a recession.

“Prices for labor and materials are still skyrocketing, and these high costs are being passed on to consumers in the form of higher new home prices at a time when affordability is declining. Trying to attract potential homebuyers. Offer discounts and incentivesbut are limited by these high material and labor costs.

Homes under construction can be seen near Wigwam Avenue and Rainbow Boulevard in Las Vegas Monday Sept. 19, 2022. (Chase Stevens/Las Vegas Review-Journal) @csstevensphoto

Homebuilder sentiment has fallen month by month this year and is now at its worst level since June 2012 outside the outbreak of the pandemic. National Association of Home Builders/Wells Fargo Home Market Index Released Wednesday.

Construction companies are doing their best to lure buyers reluctant to higher mortgage rates, which topped 7% last week on 30-year fixed rates.

For example, nearly three-fifths of builders said they would offer incentives this month. In November, his 25% of builders paid mortgage points to lower mortgage rates, up from 13% in September. Mortgage rate buy-downs increased from 19% to 27% over the same period.

Additionally, 37% of builders have reduced their prices this month from 26% in September. The average markdown is 6%, below the 10% to 12% markdown during the Great Recession.

Dani Romero is a reporter at Yahoo Finance. follow her on her twitter @daniromerotv

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