US housing starts, building permits, drop in August
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The news: US housing starts dropped to their lowest point since May last month, as expanding home inventory impacted builders appetite to increase production.
The numbers: New residential construction fell 8.5% in August to an annualised rate of 1.31 million homes. Single-family housing starts in August were at a rate of 890,000, coming in 7% below the revised July figure of 957,000, the lowest level in over 12 months. Multifamily construction also declined nearly 12% to a three-month low.
Data released by the US Commerce Department’s Census Bureau on Wednesday also showed that building permits for future single-family homes also decreased 2.2% in August, at a rate of 856,000, to the lowest level since March 2023.
Separate data released on Wednesday showed US mortgage rates have dropped to the lowest level in almost a year, spurring a surge in refinancing.
The context: US home construction has been softening over the past few years as supply of new homes for sale hit levels last seen in the mid-to-late 2000s. While borrowing costs have dipped recently, economists still see the current oversupply of homes weighing on construction in the coming months.
Markets have priced in incoming rate cuts by the Federal Reserve, with the first expected to be announced later on Wednesday.
The sources: Census Bureau data, Bloomberg
