Housing starts plummeted 11.3% in August to a seasonally adjusted annual rate of 1.28 million, according to the U.S. Census Bureau and U.S. Department of Housing and Urban Development. It was the lowest housing start rate recorded since June 2020, Reuters reported.
Compared with August 2022, housing starts slumped 14.8%. The report came on the heels of a sharp decline in builder confidence in the housing market.
“High mortgage rates above 7% combined with low resale inventory and higher home prices are slowing housing production, as many first-time home buyers and younger households are struggling to purchase an affordable home,” stated Alicia Huey, chairman of the National Association of Home Builders (NAHB). “With high mortgage rates sending buyers to the sidelines, and a nationwide shortage of 1.5 million units, we need to increase the housing supply to get this market back into balance to meet the pent-up demand for when market conditions improve.”
Regionally, housing starts fell 7.5% in the Midwest, 4.9% in the South and 28.9% in the West. Housing starts grew 1.0% in the Northeast.
Building permits increased 6.9% from July to 1.54 million but were still 2.7% below the August 2022 building permit rate.
Housing completions in August increased 5.3% month-over-month to 1.40 million and were up 3.8% compared with August 2022.