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| Despite a partial recovery in September, the US housing market as a whole remains in a difficult state due to rising mortgage interest rates and high home prices. (Source: Reuters) |
However, mortgage interest rates, currently at their highest level in nearly 23 years, could slow the recovery of the housing market as a whole.
The total number of new homes started in the U.S. increased 7% in September, after falling to its lowest level in more than a year in August. The number of new single-family homes, which account for the majority of home construction, rose 3.2% to 963,000 in September.
The number of multi-family homes started construction also surged by 17.1%, reaching 383,000 units in September. However, with tight credit conditions, builders may struggle to secure funding for their projects.
In addition, the number of building permit applications, an indicator of future construction trends, decreased by 4.4%. However, applications for single-family housing permits in September increased by 1.8%, reaching 965,000 units, the highest level since May 2022.
Conversely, the number of building permits for multi-family homes fell sharply by 14.0%, to 459,000 applications.
Despite a partial recovery in September, the US housing market as a whole remains in a difficult state due to rising mortgage interest rates and high home prices pushing affordability to historically low levels. The surge in borrowing costs to their highest levels in decades is making many US buyers completely reluctant to buy a home.
According to the Mortgage Bankers Association (MBA), the average interest rate for 30-year fixed-rate loans rose to 7.70% last week, the highest level since November 2000.
Data on existing and new home sales later this month will provide further clues about the outlook for the U.S. housing market.
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