Unexpected Housing Data

While fourteen-year highs in mortgage rates and record-high prices keep a lid on the overall housing market, rising rents pushed the construction of multi-family housing to 36-year highs in August. Starts for housing projects with five units or more soared 28.6% to 621,000 units. Meanwhile, single-family housing starts rose 3.4% to a rate of 935,000 units. 🏘️

This strength pushed the seasonally adjusted annual rate of housing starts up 12.2% to 1.575 million in August. However, the report revised July’s data down from 1.446 to 1.404 million.

Although housing starts were strong, building permits dropped 10.0% to the lowest level since 2020. Single-family building permits dropped 3.5%, and multi-family permits fell 18.5%. 📉

Overall though, the housing market remains in rough shape.

Homebuilder sentiment has dropped for nine straight months, with a quarter of builders dropping prices to attract buyers. With the Fed expected to continue hiking rates tomorrow and into 2023, affordability isn’t likely to get better anytime soon. That means prices will have to come down to meet demand. Or so the Fed hopes. 🤷

Tomorrow’s reports from $LEN and $KBH should provide additional color on housing. Though a quick look at stocks like $OPEN, $Z, and $RDFN paint a pretty bleak picture… 🙀

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