Housing starts fell 8.5% in August to a 1.31 million annual pace, while permits dropped 3.7% to 1.31 million. Permits have now fallen for five straight months, pulling activity back to levels not seen since 2008-2009. Completions looked strong on the surface, rising 8.4% to 1.61 million. But completions only reflect projects already underway. The number of homes still being built slipped again, with single-family under construction down to 611,000. That is the lowest since early 2021 and shows builders are finishing what they started while holding back on new projects.
Single-family starts dropped 7% to 890,000, the lowest in over a year. Multi-family starts plunged 11% to 403,000, the weakest since May. Permits followed the same trend, with single-family approvals at 856,000 and multi-family at 403,000. The South, normally the engine of US housing, saw starts collapse 21% in August, dragging the national numbers lower despite small gains in the West and Northeast. This slowdown comes even as mortgage rates have tumbled to near three-year lows. Mortgage applications spiked nearly 30% last week. Normally that would be a positive sign, but affordability remains severely stretched. Home prices are still elevated and the gap between current mortgage rates and the record-low rates most owners are locked into keeps existing supply frozen. Builders know demand cannot absorb higher production without painful price cuts, so they are pulling back.The implications are clear. The supply pipeline is shrinking quickly. Permits, the cleanest measure of future building, are falling month after month. Builders are finishing old projects but not committing to new ones. Both single-family and multi-family construction are rolling over at the same time. History shows what usually happens next. In past cycles, completions held up while permits collapsed, but eventually starts came down too. That pattern played out in the mid-2000s housing bubble and again in the 1970s during stagflation. Affordability cracked and construction fell hard. August’s report is a warning. The South’s building base just seized up. Multi-family momentum has broken. Single-family starts are now at their weakest in over a year. Even with lower mortgage rates boosting applications, the underlying supply picture is deteriorating. This is not the start of a rebound. It is a market that is losing momentum fast.Source: StockMarket.News
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