Construction of new homes in the U.S. in September recovered some of the ground it lost after a sharp drop in the prior month.
Construction of new U.S. homes rebounded seven percent last month to a seasonally adjusted annual pace of 1.36 million, the Commerce Department said Wednesday.
Single‐family housing starts in September rose 3.2 percent to an annual pace of 963,000. Multi-family housing starts with five or more units unexpectedly jumped 17.1 percent to an annual rate of 383,0000.
While starts are down from the pace of building seen in the immediate post-pandemic boom, they are well above the average pre-pandemic rates. The increase in September was surprisingly strong given the surge in mortgage rates.
New home construction has been bolstered by unusual market conditions created by years of very low rates followed by a sudden surge. Most homeowners now pay mortgage rates far below what is available in the market, making them reluctant to sell existing homes. This has led to a shortage of existing homes for sale, pushing home buyers into the market for new homes.
Building permits, a leading indicator of future construction, declined 4.4 percent to an annualized rate of 1.47 million. Yet this decline was smaller than expected, with the consensus forecast calling for 1.45 million annual rate.