U.S. home construction fell by 5.3 percent in September, a sign that recent hurricanes and rising mortgage rates may be weighing on the market.
The Commerce Department said on Wednesday that housing starts slipped last month to a seasonally adjusted annual rate of 1.2 million, down from 1.27 million in August. So far this year, starts have increased by 6.4 percent. But the pace of homebuilding has decelerated since May.
“Starts are stagnating as the housing market slows, though September’s numbers were suppressed by the hurricane affecting the Carolinas,” said Tendayi Kapfidze, chief economist at Lending Tree, an online loan broker.
Homebuyers are facing new cost pressures that could be dampening demand.
The mortgage buyer Freddie Mac says that the average 30-year fixed-rate on mortgages rose to 4.9 percent last week, the highest level seen since 2011. The combination of higher borrowing costs and rising home values has made houses less affordable.
“It may be tempting to draw national conclusions from these storm-related dips and rallies, but the regional blips can’t obscure the year-long malaise in the national single-family home construction market: Starts have been hit or miss, sales flat and permits trending downward for months,” said Aaron Terrazas, a senior economist at the real-estate firm Zillow.