August sees slowdown in US single-family home building amidst high mortgage rates

Posted on September 22, 2023   |  

In August, the production of single-family homes faced challenges as mortgage rates averaged above 7%.

The housing market saw an 11.3% drop in overall housing starts, primarily driven by a significant drop in multifamily construction.

Single-family housing starts fell by 4.3%, reaching a seasonally adjusted annual rate of 941,000 units, although they remained 2.4% higher than 2022.

Builders expressed pessimism regarding the housing market, citing concerns about the consistently high mortgage rates, which are expected to continue due to a potential Federal Reserve rate hike.

The number of single-family units under construction fell by 16.3% compared to 2022, totaling 676,000, while apartments under construction rose to 1.01 million.

Regional disparities were observed, with declines in combined single-family and multifamily starts in the Northeast, Midwest, South, and West on a year-to-date basis. 

However, there was an overall increase in permits, rising by 6.9% in August. 

Single-family permits also saw a 2% increase and were up 7.2% compared to the previous year, while multifamily permits increased by 15.8%.