September witnessed a series of shifts in the housing market according to the latest data on building permits, housing starts, and housing completions from the U.S. Census Bureau.
The number of privately-owned housing units authorized by building permits in September was recorded at a seasonally adjusted annual rate of 1,473,000. This represents a 4.4% decline from the revised rate of 1,541,000 in August and is 7.2% lower than the rate of 1,588,000 in September 2022. On the brighter side, single-family home authorizations in September saw an uptick, registering at a rate of 965,000. This figure is 1.8% higher than the revised August number of 948,000. Meanwhile, authorizations for units in buildings with five units or more settled at a rate of 459,000 in September.
September's housing starts data brought some positive news. Privately-owned housing starts for the month stood at an annual rate of 1,358,000, marking a 7% increase from the revised August estimate of 1,269,000. However, this figure is still 7.2% below the September 2022 rate of 1,463,000. Delving deeper, single-family housing starts in September were up by 3.2% from August, recorded at a rate of 963,000. As for larger buildings, the rate for units in structures with five units or more was 383,000 in September.
“Single‐family permits, starts, and completions all increased month over month in September. Permits, a leading indicator of future starts, were up 1.8% from August. Starts, which is more groundbreaking on new homes, were up 3.2% over August. And completions jumped 5.3% from August, adding more supply to the housing stock,” said First American Deputy Chief Economist Odeta Kushi, adding, "Higher rates, all else held equal, dampen affordability and price out potential buyers, particularly rate-sensitive first-time home buyers. Higher interest rates also increase the cost of builder development and construction loans.”
“Housing starts rebounded in September, but context is key. Last month's big dip means the bar was low for monthly growth. Builders are generally feeling more pessimistic. Builder sentiment dipped for the third consecutive month in October to the lowest level since January 2023. Of the index’s three components, present sales conditions fell 4 points, sales expectations in the next six months dropped 5 points, and prospective buyer traffic dropped 4 points.”
The housing completions segment also echoed positive trends in September. Privately-owned housing completions reached a seasonally adjusted annual rate of 1,453,000, a 6.6% increase from the revised August estimate of 1,363,000. Additionally, this figure is 1% higher than the September 2022 rate of 1,438,000. Breaking it down, single-family housing completions in September grew by 5.3% from August, hitting a rate of 998,000. For buildings housing five units or more, the rate was 445,000.
So while the U.S. housing market experienced a decline in building permits, it saw encouraging growth in both housing starts and completions in September. These mixed signals underscore the dynamic and multifaceted nature of the country's real estate landscape.
