Freddie Mac: Higher Mortgage Rates Slow October Housing Production

According to Freddie Mac, housing starts decreased last month as the average monthly mortgage rate rose by a quarter point from 6.18% to 6.43% between September and October.

The U.S. Department of Housing and Urban Development and the U.S. Census Bureau have reported that the overall rate of housing starts decreased by 3.1% in October, reaching a seasonally adjusted annual rate of 1.31 million units.

The number of housing units that builders would commence if development continued at this rate for the next 12 months is indicated by the October reading of 1.31 million starts.

Single-family starts experienced a 6.9% decline in this aggregate figure, resulting in a seasonally adjusted annual rate of 970,000. Single-family construction has experienced a 9.3% increase year-to-date.

Despite a 9.6% increase to an annualized 341,000 pace in the volatile multifamily sector, which encompasses apartment buildings and condos, the sector is down 29.3% year-to-date.

Despite the fact that housing starts experienced a decline in October, builder sentiment improved for the third consecutive month in November. Builders are hoping that an improved regulatory environment in 2025 will enable the industry to increase the supply of housing.

The Federal Reserve’s additional interest rate reductions through 2025 are expected to result in reduced interest rates for construction and development loans.

This will contribute to the stabilization of apartment construction and the expansion of single-family home building.

Although the number of multifamily starts increased in October, the number of apartments under construction has decreased to 821,000, the lowest count since March 2022 and an 18.9% decrease from the previous year.

1.8 apartments were completed in October for every apartment that commenced construction. In October, the three-month moving average achieved a ratio of 2.

In October, the number of single-family residences under construction was 644,000, a decrease of 3.6% from the previous year and a 22% decrease from the peak count in the spring of 2022.

The combined single-family and multifamily starts are 10.4% higher in the Northeast, 1.7% lower in the Midwest, 5.0% lower in the South due to hurricane effects, and 4.4% lower in the West on a regional and year-to-date basis.

In October, the annualized rate of permits decreased by 0.6% to 1.42 million units. Single-family permits have increased by 0.5% to 968,000 units and are up 9.4% year-to-date.

The annualized cadence of multifamily permits decreased by 3.0% to 448,000.

Permits are 0.9% higher in the Northeast, 3.9% higher in the Midwest, 2.4% lower in the South, and 4.8% lower in the West when examining regional data on a year-to-date basis.

[Read more about this topic on Eyeonhousing.org]