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6 BuildersOutlook 2024Issue11
Higher Mortgage Interest Rates Slow Housing
ousing starts edged lower last month as average monthly mortgage rates increased a quarter-point from 6.18 % to 6.43 % between September and October , according to Freddie Mac . Overall housing starts decreased 3.1 % in October to a seasonally adjusted annual rate of 1.31 million units , according to a report from the U . S . Department of Housing and Urban Development and the U . S . Census Bureau . The October reading of 1.31 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months . Within this overall number , single-family starts decreased 6.9 % to a 970,000 seasonally adjusted annual rate . On a yearto-date basis , single-family construction is up 9.3 %. The volatile multifamily sector , which includes apartment buildings and condos , increased 9.6 % to an annualized 341,000 pace but are down 29.3 % on a year-to-date basis . “ Although housing starts declined in October , builder sentiment improved for a third straight month in November as builders anticipate an improved regulatory environment in 2025 that will allow the industry to increase housing supply ,” said Carl Harris , chairman of the National Association of Home Builders ( NAHB ) and custom home builder from Wichita , Kan . “ While multifamily starts were up in October , the number of apartments under construction is down to 821,000 , the lowest count since March 2022 ,” said NAHB Chief Economist Robert Dietz . “ Further interest rate cuts from the Federal Reserve through 2025 should result in lower interest rates for construction and development loans , helping to lead to a stabilization for apartment construction and expansion for single-family home building .”
On a regional and year-to-date basis , combined single-family and multifamily starts are 10.4 % higher in the Northeast , 1.7 % lower in the Midwest , 5.0 % lower in the South due to hurricane effects , and 4.4 % lower in the West . Overall permits decreased 0.6 % to a 1.42 million unit
annualized rate in October . Single-family permits increased 0.5 % to a 968,000 unit rate and are up 9.4 % on a year-to-date basis . Multifamily permits decreased 3.0 % to an annualized 448,000 pace . Looking at regional data on a year-to-date basis , permits are 0.9 % higher in the Northeast , 3.9 % higher in the Midwest , 2.4 % lower in the South and 4.8 % lower in the West . Multifamily completions are elevated as the apartment construction slowdown continues . In October , there were 1.8 apartments that completed construction for every one apartment that started construction .
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