Housing starts declined in August
|Summary
Single and multfamily starts both fell sharply in August
Total housing starts dropped 11.3% to a 1.28 million-unit pace in August. The monthly decline was broad-based, with single-family and multifamily starts falling by 4.3% and 26.3%, respectively. The surprising pull-back in starts stands in contrast to a strong gain in both single-family and multifamily building permits.
The below-consensus housing starts number is a reminder of the month-to-month volatility of residential construction data and is likely more noise than signal. That said, the drop in August should not be completely written off. The recent leg-up in borrowing costs will certainly test builders' ability to lean on incentives to sell homes. Builders have thus far navigated the higher rate environment relatively well, mostly thanks to greater pricing flexibility. As mortgage rates have risen, many builders have successfully offered rate buy-downs and price discounts to incentivize affordability-crunched buyers. However, not every builder has the ability to offer such incentives and thus are more sensitive to upward changes in mortgage rates.
A second consecutive pullback in builder sentiment suggests builders may be starting to reassess plans to scale up production in light of the recent rise in 30-year mortgage rates, which are now hovering above 7%. The NAHB Housing Market Index fell to 45 in September, the lowest reading since April.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.