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It’s a bit of a mixed bag in new residential construction data published today, generally known as housing starts. In June, the seasonally adjusted annual rate (SAAR) of the start of new home construction jumped 4.6% over the revised May rate. However, this rate remains 0.5% lower than the rate of construction starts in June of 2024, one year ago.
Surprising news on Wednesday as we learn that the latest residential construction data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development show that overall housing starts in May dropped a substantial 9.8% compared to the reading in April, and ranks below May 2024 starts by 4.6%. This is the slowest pace in housing starts in the last five years.
The latest data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development showed that residential construction (housing starts) took off in August with high single-digit overall and even double-digit upside gains in the single-family construction segment. Many industry observers attributed the upturn to now more optimistic builders looking to take advantage of improving housing affordability with mortgage rates declining. Many builders believe this will stimulate a big upturn in sales.
Residential construction, known as housing starts, dropped in March by a surprising double-digit percentage. Most industry analysts believe that the slowdown is due to stubborn inflation readings motivating the Fed to keep interest rates high which is affecting mortgage rates and home affordability.
After solid gains in February raised hopes in the segment, the March numbers were a chilling splash of reality as home inventory is low and mortgage rates are high.
The overall housing market has been an economic laggard as the country has seen its economy rebound in the post-pandemic era. The reason for this is primarily due to an unusual combination of high interest rates AND high home prices AND limited available inventory of homes for sale. It is a triple witching that has bedeviled the housing industry in the post-pandemic era.
But is housing about to turn up?
The latest data on residential construction, a government reading known as housing starts, took a surprising jump in November according to the recently released information from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. Housing starts jumped an impressive 14.8% in November as compared to the revised October reading – a huge statistical leap.
Is this the beginning of a new trend? After a notable jump in September, which some suggested may have been a bit of a fluke, residential construction – known as housing starts – actually surprised some industry analysts by jumping again in October. And while the amount of increase was more modest, that there was another month of increase may indicate the beginning of a new trend. Yet other data calls into question just where residential construction is heading. Read on to see that data…
In new data released Wednesday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, residential construction – otherwise known as housing starts – returned to growth again, after registering a concerning double-digit decline in August. However, most analysts believe housing will continue to be challenged by a combination of high prices and high interest rates combining to make housing unaffordable for most buyers.
Yet another sign of the struggling housing industry as climbing mortgage rates and historically high home prices combine to drop new residential construction – known as housing starts – to their lowest level in three years. Both single-family housing starts and overall housing starts, which includes multi-family dwellings, saw significant declines in August.
Residential construction of new homes – known as housing starts – continues to register monthly declines as a combination of still-high home prices along with rapidly rising mortgage rates results in collapsing home affordability. While economists continue to debate if and when the U.S. economy enters a recession – it’s clear that housing overall, and the home building segment specifically – is already there.
