


The number of housing starts fell a little in September despite mortgage rates coming down from multi-year highs.
Housing starts, the change in the number of new residential buildings that began construction, fell 0.5% from August to this past month, according to a Friday morning report from the Census Bureau. They are nearing the lowest level since May 2020, when the economy was struggling to dig its way out of the pandemic.
They are now at a seasonally adjusted annual rate of 1.35 million. From September 2023, they fell 0.7%.
For permits to build, which are seen as a proxy for future construction, the rate of new permits last month was 5.7% below the rate in September of last year.
As of the end of September, the average rate on a 30-year, fixed-rate mortgage was about 6.3%, according to Mortgage News Daily, which tracks daily changes in rates. That is down more than a full percentage point from a recent peak earlier this year, although it is still far higher than in the years prior to the pandemic.
At the peak of the pandemic, the Federal Reserve cut its interest rate target to near zero, and mortgage rates plunged to ultralow levels. At one point in early 2021, people were locking in 2.5% mortgages — the lowest level in postwar modern history.
The low rates prompted an explosion of homebuying and investment, generating a pop in home construction. But then, the dynamic began shifting fast when inflation increased and the Fed hiked interest rates in response, thus pushing mortgage rates to the highest level since the turn of the century.
Now, the Fed has conducted its first rate cut since the start of the pandemic, with the first downward revision being a double-sized half percentage point rate cut. Investors expect more to come in the next several months, which has been the main factor pushing down mortgage rates.
New home sales fell slightly in August despite mortgage rates continuing to fall. The number fell 4.7% from July to 716,000, according to a report from the Census Bureau. But the number of new home sales is 9.8% higher than it was in August 2023.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Meanwhile, existing home sales in July rose 1.3% to a seasonally adjusted annual rate of 3.95 million, the National Association of Realtors reported. However, the pace of existing home sales is down nearly 2.5% from the year before.
The housing market and housing affordability have been major issues for voters this election cycle, given the years of hot inflation experienced under President Joe Biden. The Fed hiking interest rates in order to tamp down inflation has only made buying a home even more challenging for voters as mortgage rates rose.