The most current residential housing market report, delayed by the federal government shutdown last October, shows that builders have experienced substantial challenges in recent months.
Mortgage rates rose earlier this year, limiting buyer demand and weighing on home building activity, as did stubbornly high construction costs.
Overall housing starts fell 4.6 percent in October to a seasonally adjusted annual pace of 1.25 million units, according to the U.S. Department of Housing and Urban Development and the Census Bureau.
This rate represents the number of dwelling units built over the next 12 months if October’s activity is continued.
Single-family starts increased 5.4 percent to a seasonally adjusted annual rate of 874,000 units, but remained 7.8 percent lower than the previous year.
Single-family housing starts are down 7.0% year to date. Given the recent volatility, the three-month moving average, which has declined to 857,000 units, provides a clearer warning.
Multifamily starts, which include apartment complexes and condominiums, decreased dramatically, by 22.0 percent, to 372,000 units per year.
The three-month moving average for multifamily development has fallen to 424,000 units, with activity 7.9 percent lower than a year ago.
Regionally and year-to-date, combined single-family and multifamily starts grew 9.1 percent in the Midwest and 8.5 percent in the Northeast, while they fell 1.9 percent in the West and 4.1 percent in the South.
In October, the total number of housing units under construction was 1.3 million, down 10.1% from the previous year.
Single-family homes under construction declined to 596,000 units, a 7.0 percent year-over-year decrease and the lowest level since November 2020.
Multifamily units under construction fell to 790,000, down from heights of over 1 million units in December 2023 and 4.0 percent lower than a year ago.
Single-family home completions were generally strong at around 1 million units each year, demonstrating ongoing progress in completing projects that were already underway and representing a 2.0 percent gain over the previous year.
However, multifamily completions fell dramatically, falling 41.7 percent year on year to 377,000 units. Year to far, overall completions in both sectors are down 9.2 percent.
In October, overall building permits fell 0.2 percent to 1.41 million units on an annualized basis.
Single-family permits fell 0.5 percent to 876,000 units, marking a 9.4 percent decrease from the previous year, with year-to-date permits down 7.0 percent.
Multifamily permits remained largely stable at 536,000 units per month, and are up 16.3 percent from October 2024.
Year-to-date total permits in the Midwest grew 5.9 percent, while they fell 3.3 percent in the West, 4.0 percent in the South, and 9.3 percent in the Northeast.
[Read more about this topic on Eyeonhousing.org]