WASHINGTON (Reuters) – U.S. single-family homebuilding increased marginally in October and activity could remain moderate in the near term amid higher mortgage rates, which saw confidence among builders slumping this month.
Single-family housing starts, which account for the bulk of homebuilding, rose 0.2% to a seasonally adjusted annual rate of 970,000 units last month, the Commerce Department’s Census Bureau said on Friday. Data for September was revised up to show starts rising to a rate of 968,000 units instead of 963,000 units as previously reported.
A survey on Thursday showed confidence among single-family builders plummeting to an 11-month low in November. The National Association of Home Builders noted that many builders continue to reduce home prices to boost sales, with mortgage rates stuck above 7% since mid-August.
The rate on the popular 30-year fixed mortgage averaged 7.79% in late October, the highest since November 2000, according to data from mortgage finance agency Freddie Mac. It has since retreated following data this month showing the labor market cooling, and averaged a still-high 7.44% this week.
Starts for housing projects with five units or more jumped 4.9% to a rate of 382,000 units in October. With a huge stock of multi-family housing under construction and the rental vacancy rate hitting a 2-1/2 high in the third quarter, there is little room for major gains.
The large stock of multi-family housing in the pipeline is expected to be the key driver of low inflation next year by limiting increases in rents.
Overall housing starts rose 1.9% to a rate of 1.372 million units in October. Economists polled by Reuters had forecast starts slipping to a rate of 1.350 million units.
Permits for future construction of single-family homes rose 0.5% to a rate of 968,000 units last month.
Residential investment rebounded in the third quarter, ending nine straight quarters of decline.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
