Housing starts slipped in October, falling to a seasonally adjusted annual rate of 1.311 million, a decrease of 3.1% compared with the revised September estimate of 1.353 million, according to the U.S. Census Bureau.
That’s down 4.0% compared with October 2023.
Starts of detached single-family homes were at a rate of 970,000, a decrease of 6.9% compared with September.
Starts of multifamily homes (five units or more per building) were at an annual rate of 326,000, an increase of 9.8% compared with the previous month.
Building permits were also down in October: They were at a seasonally adjusted annual rate of 1.416 million, a decrease of 0.6% compared with September and down 7.7% compared with October 2023.
Permits for single-family homes were at a rate of 968,000, up 0.5% compared with September.
Permits for multifamily dwellings were at a rate of 393,000, a decrease of 3.0% compared with September.
Housing completions were at a rate of 1.614 million, down 4.4% compared with the previous month but up 16.8% compared with October 2023.
“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,” says Carl Harris, chairman of the National Association of Home Builders (NAHB), in a statement.
“While multifamily starts were up in October, the number of apartments under construction is down to 821,000, the lowest count since March 2022,” adds Robert Dietz, chief economist for NAHB. “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.”
Odeta Kushi, deputy chief economist for First American, says the decrease in housing starts came “despite rising builder sentiment.”
“Recent mortgage rate volatility serves as a reminder that elevated financing costs could temper a broader housing market recovery,” Kushi says in a statement. “Mortgage rates have trended upward since October, driven by stronger-than-expected economic data and hawkish signals from the Federal Reserve. Additionally, builders continue to face headwinds, including high construction costs and skilled labor shortages.”
“However, demand for new homes remains a bright spot in the broader housing market, contrasting sharply with weakness in existing-home sales,” Kushi says. “Builders’ ability to offer incentives and higher inventory of new homes for sale supports this relative strength.”
“While builder sentiment remains in negative territory, builders are increasingly confident about selling newly constructed homes,” Kushi adds. “Of the index’s three components, builder sentiment on sales expectations for the next six months jumped seven points to 64—the highest since April 2022.”
“Looking ahead to 2025, my baseline expectation is that single-family home construction is poised to steadily increase, bolstered by modest declines in financing costs for builders and buyers and by the scarcity of existing homes due to the ongoing mortgage rate lock-in effect,” Kushi says.
Photo: Avel Chuklanov
