WASHINGTON (Reuters) – U.S. single-family home construction rebounded strongly in September, boosted by demand for new construction amid a scarcity of previously owned homes, but the highest mortgage rates in nearly 23 years may slow momentum.
The Commerce Department said Wednesday that single-family housing starts, which account for the bulk of homebuilding, increased 3.2% to a seasonally adjusted annual rate of 963,000 units last month. Data for August was revised to show a decline to a rate of 933,000 units instead of 941,000 units as previously reported.
The interest rate on a 30-year fixed mortgage rose in September, averaging 7.31% in the last week of the month, the highest level since late 2000, according to data from mortgage financing agency Freddie Mac. Mortgage rates have risen along with the yield on the benchmark 10-year Treasury note, which has risen to a 16-year high, partly reflecting the resilience of the economy.
Confidence among single-family homebuilders deteriorated for the third straight month in October, with the National Association of Home Builders/Wells Fargo Housing Market Index falling to a nine-month low, a survey showed Tuesday. Builders reported lower levels of buyer traffic.
Housing developments starting with five or more units rose 17.1% to an average of 383,000 units in September. Additional gains are likely to be limited by reduced access to credit for builders as well as the huge inventory of multifamily housing under construction.
Overall housing starts accelerated by 7.0% to a rate of 1.358 million units in September. Economists polled by Reuters had expected units to recover to a rate of 1.380 million units.
Permits for future construction of single-family homes rose 1.8% in September to a rate of 965,000 units.
Residential investment has contracted for nine straight quarters, the longest stretch since the housing market bubble burst, leading to the 2008 global financial crisis and Great Recession.
(Reporting by Lucia Mutikane; Editing by Chizuo Nomiyama)
