Single-family housing starts gained in September from the previous month amid lower mortgage rates.
The measure rose 2.7% to a seasonally adjusted annual pace of 1.027 million units, the strongest pace in five months, according to new data from the Census Bureau.
The increase came as mortgage rates slid steadily last month, pushing the average 30-year fixed loan to its lowest level since early February 2023. The Fed cut its benchmark rate by half a percentage point in September.
Lower rates likely encouraged builders to file more building permits during the month. Contract permits for single-family dwellings rose to a pace of 970,000, a 0.3% gain from August’s revised figure of 967,000 units.
October’s data could reveal a different story, given that mortgage rates have ticked back up.
“While single-family home building increased in September, higher mortgage interest rates in October are likely to place a damper on growth in next month’s data,” NAHB’s chief economist Robert Dietz wrote in a note after the release.
Overall, housing starts eased in September, pressured by a drop in multifamily construction. Housing starts slipped 0.5% from the previous month to a seasonally adjusted annual pace of 1.354 million units.
