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| Despite a partial recovery in September, the U.S. housing market remains in a difficult situation due to rising mortgage rates and high home prices. (Source: Reuters) |
However, mortgage rates are at their highest level in nearly 23 years, which could slow the overall housing market recovery.
Total housing starts in the U.S. rose 7% in September, after falling to the lowest level in more than a year in August. New construction of single-family homes, which account for the bulk of housing construction, rose 3.2% to a rate of 963,000 units in September.
Multifamily housing starts also rose sharply, rising 17.1% to a seasonally adjusted annual rate of 383,000 units in September. However, with credit conditions tightening, builders may have difficulty securing financing for projects.
Meanwhile, building permit applications, a proxy for future construction, fell 4.4%. Single-family home building permits rose 1.8% in September to a seasonally adjusted annual rate of 965,000 units, the highest since May 2022.
In contrast, multifamily housing building permits fell sharply, down 14.0% to a seasonally adjusted annual rate of 459,000.
Despite a modest recovery in September, the U.S. housing market remains in dire straits as rising mortgage rates and high home prices push home prices to historic lows. Rising borrowing costs to multi-decade highs are putting many U.S. buyers off buying a home altogether.
The average interest rate on a 30-year fixed loan rose to 7.70% last week, its highest level since November 2000, according to the Mortgage Bankers Association (MBA).
Data on existing home sales and new homes due later this month will provide further clues about the outlook for the U.S. housing market.
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