The number of single-family housing starts in September increased from the previous month due to a decline in mortgage interest rates.
New data from the Census Bureau shows the index rose by a seasonally adjusted annual pace of 2.7% to 1.027 million homes, the strongest pace in five months.
The increase comes as mortgage rates fell steadily last month, pushing the average 30-year fixed loan to its lowest level since early February 2023. The Federal Reserve lowered its benchmark interest rate by 0.5 percentage points in September.
Lower interest rates appear to have encouraged builders to apply for more building permits during the month. The number of contract permits for single-family homes increased to 970,000 units, an increase of 0.3% from the August revised figure of 967,000 units.
October’s statistics could reveal a different picture, given that mortgage rates are rising again.
“Single-family home construction increased in September, but rising mortgage rates in October could dampen growth in next month’s statistics,” NAHB Chief Economist Robert Dietz said in a note after the release. “It’s expensive.”
Overall, housing starts fell in September, weighed down by a decline in multifamily construction. Housing starts decreased 0.5% from the previous month, bringing the seasonally adjusted annual pace to 1.354 million units.
