Did you know that the US home-building is rising and is at an all-time high? This sector has risen to 1.5% to a seasonally adjusted annual rate of 1.228 million units in October 2018. Though, it has seen a bit of a slowdown, with building permits fell 0.6 percent to a rate of 1.263 million units in October.
What do you think awaits the homebuilding sector? Let us know. We’d love to hear your thoughts on this.
WASHINGTON (Reuters) – U.S. home building rose in October amid a rebound in multi-family housing projects, but the construction of single-family homes fell for a second straight month, suggesting the housing market remained mired in weakness as mortgage rates march higher.
Other details of the report published by the Commerce Department on Tuesday were also soft. Building permits declined last month and homebuilding completions were the fewest in a year. Housing starts increased 1.5 percent to a seasonally adjusted annual rate of 1.228 million units last month.
“Rising interest rates and rising home prices are creating affordability challenges that are causing buyers to take pause and re-assess their situation,” said Scott Volling, principal at PwC in Atlanta.
Building permits fell 0.6 percent to a rate of 1.263 million units in October. Economists polled by Reuters had forecast housing starts rising to a 1.225 million-unit pace last month.
The struggling housing market is in stark contrast with the broader economy, which has enjoyed two straight quarters of robust growth and an unemployment rate at a near 49-year low of 3.7 percent. Prolonged housing weakness, together with a relentless sell-off on the stock market could stoke fears over the durability of the economy’s strength.
In addition to rising borrowing costs, the housing market is also being squeezed by land and labor shortages, which have led to tight inventories and more expensive homes. Many workers are being priced out of the market as wage growth has lagged.
The 30-year fixed mortgage rate is hovering at a seven-year high of 4.94 percent, according to data from mortgage finance agency Freddie Mac. Wages rose 3.1 percent in October from a year ago, trailing house price inflation of about 5.5 percent.
Stocks on Wall Street were trading lower on Tuesday, with the Standard & Poor’s 500 index hitting a three-week low following weak results and forecasts from retailers including Target and Kohl’s Corp, and home improvement chain Lowe’s Cos.
The dollar rebounded from two-week lows against a basket of currencies, while longer-dated U.S. Treasury yields fell.
Residential investment contracted in the first nine months of the year and housing is likely to remain a drag on economic growth in the fourth quarter. Economists expect housing activity to remain weak through the first half of 2019.