Source: Reuters —
WASHINGTON, Dec 20 (Reuters) – U.S. single-family homebuilding tumbled to a 2-1/2-year low in November and permits for future construction plunged as higher mortgage rates continued to depress housing market activity.
The dour report from the Commerce Department on Tuesday followed on the heels of news on Monday that confidence among homebuilders plummeted for a record 12th month in December.
It put residential investment on track to contract for the seventh consecutive quarter, which would be the longest such stretch since the collapse of the housing bubble triggered the Great Recession. The housing market has borne the brunt of the Federal Reserve’s fastest interest rate-hiking cycle since the 1980s as the U.S. central bank wages war against inflation.
Single-family housing starts, which account for the biggest share of homebuilding, dropped 4.1% to a seasonally adjusted annual rate of 828,000 units last month. That was the lowest level since May 2020, when the economy was reeling from the first wave of the COVID-19 pandemic.
Outside the pandemic plunge, single-family starts are the weakest since February 2019. Single-family homebuilding decreased in the South and Midwest, generally considered as the more affordable regions of the United States. It increased in the Northeast and West.
Starts for housing projects with five units or more surged 4.8% to a rate of 584,000 units, the highest level since April.
Multi-family housing construction is being driven by strong demand for rental accommodation as the higher mortgage rates force many potential homebuyers to remain renters.