Housing construction fell sharply in October, another miss for the rapidly constricting housing market.
Starts for both single- and multi-family units dropped by 4.2% month-over-month to an annualized rate of 1.425 million units, according to data from the U.S. Census Bureau.
Economists surveyed by MarketWatch had expected housing starts to register a 1.41 million rate after seasonal adjustment.
Single-family starts fell by 6.1% from September, and single-family completions were down 8.3%.
Building permits dipped 2.4%, an indicator of builders’ pessimism moving into winter, the slowest season for real estate.
Permits offer an indication of how many homes will be built in the coming months. Housing is desperately needed, especially single-family units.
Some experts say it could take a decade to build inventory up to appropriate levels.
Freddie Mac reported last year that the U.S. was short 3.8 million units in 2020.
Nadia Evangelou, a senior economist and director of forecasting for NAR, told The Hill the organization now believes the country needs 5.5 million new homes.
“The housing shortfall was created over decades. After the mid-2000s boom, we continued to underbuild compared to the historical average. In the meantime, lower mortgage rates during the pandemic aggravated the shortage. Even though demand has slowed down, there are still not enough homes,” Evangelou said.
Builders are pulling back as high-interest rates and soaring prices force buyers out of the market. New homes are taking far longer to sell because hopeful buyers now find can’t afford the monthly payment.
As a result, builder confidence in the market for newly-built homes saw its 11th consecutive monthly decline in November, falling to its lowest level since 2012.
“Higher interest rates have significantly weakened demand for new homes as buyer traffic is becoming increasingly scarce,” said NAHB Chairman Jerry Konter.
“With the housing sector in a recession, the Biden administration and new Congress must turn their focus to policies that lower the cost of building and allow the nation’s home builders to expand housing production.”
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