Housing starts continue to fall amid mortgage rate peak

Census Bureau recorded 4% drop from September

Inflation and a downturn in the housing market continue to hinder homebuilding across the country.

Residential housing starts fell 4.2 percent in October from the revised estimated total of September, according to monthly figures reported Thursday by the U.S. Census Bureau. Housing starts were also down 8.8 percent year over year.

The seasonally adjusted rate for privately owned housing starts last month was approximately 1.42 million. Single-family housing starts clocked in at a rate of 855,000, down 6.1 percent from September’s revised figure.

Future construction is also trending down, though not as precipitously as current construction. Building permits for privately owned housing units dropped 2.4 percent from September and 10.1 percent year over year. Authorizations for single-family permits, meanwhile, fell 3.6 percent from the previous month.

Building completions are also dropping, a casualty of the decline in housing starts from previous months. Privately owned housing completions came in at a seasonally adjusted rate of 1.34 million last month, a 6.4 percent decrease from the previous month, but a 6.6 percent increase year-over-year.

This year has been a wild one for homebuilders. At the start, residential construction appeared to be gaining some momentum; privately owned housing starts jumped 6.8 percent month from January to February and 22.3 percent year over year.

But the Federal Reserve started hiking interest rates in the spring to combat rising inflation, sending mortgage rates past 7 percent to a 21-year high and cutting off demand for new homes. Confidence among builders has been dropping consistently each month as the housing market keeps cooling and supply constraints remain present, as do the volatile costs of building materials.