U.S. housing market mired in weakness as mortgage rates go up
U.S. homebuilding rose in October amid a rebound in multi-family housing projects, but construction of single-family homes fell for a second straight month, suggesting the housing market remained mired in weakness as mortgage rates march higher.
Other details of the report published by the Commerce Department on Tuesday were also soft. Building permits declined last month and homebuilding completions were the fewest in a year. Housing starts increased 1.5% to a seasonally adjusted annual rate of 1.228 million units last month.
Building permits fell 0.6% to a rate of 1.263 million units in October. The market had forecast housing starts rising to a 1.225 million-unit pace last month.
The struggling housing market is in stark contrast with the broader economy, which has enjoyed two straight quarters of robust growth and an unemployment rate at a near 49-year low of 3.7%. Prolonged housing weakness, together with a relentless sell-off on the stock market could stoke fears over the durability of the economy's strength.
In addition to rising borrowing costs, the housing market is also being squeezed by land and labor shortages, which have led to tight inventories and more expensive homes. Many workers are being priced out of the market as wage growth has lagged.
Tuesday's data also suggested that housing supply is likely to remain tight in the near term. Homebuilding completions in October fell 3.3% to a rate of 1.111 million units, the lowest level since September 2017.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap.
The stock of housing under construction rose 0.5% to a more than 11-year high of 1.137 million units last month. But the multi-family homes segment made up just over half of housing inventory under construction last month.
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U.S. homebuilding rose in October amid a rebound in multi-family housing projects, but construction of single-family homes fell for a second straight month, suggesting the housing market remained mired in weakness as mortgage rates march higher.
Other details of the report published by the Commerce Department on Tuesday were also soft. Building permits declined last month and homebuilding completions were the fewest in a year. Housing starts increased 1.5% to a seasonally adjusted annual rate of 1.228 million units last month.
Building permits fell 0.6% to a rate of 1.263 million units in October. The market had forecast housing starts rising to a 1.225 million-unit pace last month.
The struggling housing market is in stark contrast with the broader economy, which has enjoyed two straight quarters of robust growth and an unemployment rate at a near 49-year low of 3.7%. Prolonged housing weakness, together with a relentless sell-off on the stock market could stoke fears over the durability of the economy's strength.
In addition to rising borrowing costs, the housing market is also being squeezed by land and labor shortages, which have led to tight inventories and more expensive homes. Many workers are being priced out of the market as wage growth has lagged.
Tuesday's data also suggested that housing supply is likely to remain tight in the near term. Homebuilding completions in October fell 3.3% to a rate of 1.111 million units, the lowest level since September 2017.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap.
The stock of housing under construction rose 0.5% to a more than 11-year high of 1.137 million units last month. But the multi-family homes segment made up just over half of housing inventory under construction last month.
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