September 20, 2022 | 09:46
U.S. Housing Starts: Nailed It
Housing starts beat even the loftiest expectations, surging 12.2% following a 10.9% drop in the prior month. The current level now stands at 1.575 mln a.r.—pretty much in line with a year ago. Construction of single-family homes climbed 3.4%. That’s only the second monthly increase this year as low lumber prices and other input costs provided some temporary reprieve. Meantime, volatile multi-units rocketed 28%, marking the biggest jump since the start of 2021. Regionally, starts were up in three of the quadrants with the Northeast bucking the trend (-17.3%).
Building permits—a good gauge for future home building activity—fell again, down 10.0% to 1.517 mln annualized. Aside from a blip in June 2021, the level of starts is now above the level of permits for the first time since February 2020. Looking ahead, weaker construction is likely. The combo of hot inflation, a cloudy economic outlook and mortgage rates that are the highest since 2008, are now working fast to dent sales activity. That’s left builders on the hook for a number of unsold properties as buyers retreat. A report earlier this week showed home builder sentiment fell to the lowest level since 2014 with declines posted every month this year—the longest losing streak since at least 1985.
Bottom Line: U.S. home builders aren't exactly setting aside their construction tools, though sites will likely prove to be far less busy in the year ahead. Overall, the once-booming housing market is set to sputter further amid still-stirring underlying price pressures, a fading economic outlook and quickly tightening financial conditions.