WASHINGTON, DC — Elevated mortgage rates, high construction costs for building materials and weakening demand stemming from deteriorating affordability conditions continue to act as a drag on single-family housing production, the National Association of Home Builders said last week.
According to the Washington, DC-based NAHB, overall housing starts declined 4.2%, to a seasonally adjusted annual rate of 1.43 million units in October. Within that overall number, single-family starts decreased 6.1% to an 855,000 seasonally adjusted annual rate. Year-to-date, single-family starts are down 7.1%. The multifamily sector, which includes apartment buildings and condos, decreased 1.2% to an annualized 570,000 pace.
“This will be the first year since 2011 to post a calendar-year decline for single-family starts,” said NAHB Chief Economist Robert Dietz. “We are forecasting additional declines for single-family construction in 2023, which means economic slowing will expand from the residential construction market into the rest of the economy.”
The NAHB also reported that builder confidence in the market for newly built single-family homes posted its 11th straight monthly decline in November, the lowest reading since June 2012, with the exception of the onset of the COVID-19 pandemic in the spring of 2020.
In a related development, existing-home sales retreated for the ninth straight month in October, with all four major U.S. regions registering month-over-month and year-over-year declines, according to the National Association of Realtors.
“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” said NAR Chief Economist Lawrence Yun, noting that the impact is greater “in expensive areas of the country and in markets that witnessed significant home price gains in recent years.”