The Commerce Department’s New Residential Construction Report show the plunge in housing starts with single family leading the way.
Building Permits
- Privately‐owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,564,000. This is 1.4 percent above the revised August rate of 1,542,000, but is 3.2 percent below the September 2021 rate of 1,615,000.
- Single‐family authorizations in September were at a rate of 872,000; this is 3.1 percent below the revised August figure of 900,000.
- Authorizations of units in buildings with five units or more were at a rate of 644,000 in September.
Housing Starts
- Privately‐owned housing starts in September were at a seasonally adjusted annual rate of 1,439,000. This is 8.1 percent (±14.9 percent) below the revised August estimate of 1,566,000 and is 7.7 percent (±11.5 percent) below the September 2021 rate of 1,559,000.
- Single‐family housing starts in September were at a rate of 892,000; this is 4.7 percent (±10.7 percent) below the revised August figure of 936,000.
- The September rate for units in buildings with five units or more was 530,000.
Housing Completions
- Privately‐owned housing completions in September were at a seasonally adjusted annual rate of 1,427,000. This is 6.1 percent (±11.0 percent) above the revised August estimate of 1,345,000 and is 15.7 percent (±13.1 percent) above the September 2021 rate of 1,233,000.
- Single‐family housing completions in September were at a rate of 1,049,000; this is 3.2 percent (±8.8 percent)* above the revised August rate of 1,016,000.
- The September rate for units in buildings with five units or more was 376,000.
Unadjusted Starts, Permits, Completions
The SAAR numbers have a way of making numbers look much bigger than they are.
The above chart shows there were 124,000 starts in September vs the headline number of 1.439 million.
Housing Starts Single Family vs Multi-Family
Key Points
- The huge jump in housing starts in August was mostly multi-family construction.
- Single-family starts plunged to 892,000 SAAR. That’s the lowest since 750,000 in May of 2020.
30-year Mortgage Rates
The current average for 30-year mortgage rates is 7.15 percent just off the 7.16 percent high for this move.
This is the highest rate since 2001 and the reason economists expected housing starts to resume their plunge.
Comments on the Fed
- The Fed actively created a housing bubble a second time, by holding interest rates too low, to long again.
- The Fed added mortgages to its balance sheet all the way to March of 2022 despite surging inflation.
Now, the Fed actively seeks to pop the housing bubble that it created. Given policy acts with a lag, the Fed is likely to overshoot with a policy error in the opposite direction.
Is this anyway to run a business?
Inflation Out of Hand
In related news, please note Renters Surpass Homeowners in 41% of Zip Codes in the 50 Largest U.S. Cities
To understand how far behind the curve the Fed let inflation progress, please see CPI Much Hotter Than Expected Led by a Surge in Price of Food and Shelter
This post originated at MishTalk.Com.
Thanks for Tuning In!
Please Subscribe to MishTalk Email Alerts.
Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.
If you have subscribed and do not get email alerts, please check your spam folder.
Mish
challenges… blah blah.”