The pace of new-home construction slid again in October, although by less than some observers were expecting.
Housing starts, which include construction of new single-family and multifamily residences, fell 4.2% month over month to a seasonally adjusted annual rate 1,425,000 units, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said in a press release. Year over year, starts were down 8.8%.
New single-family home starts fell 6.1% from September’s revised annual estimate to 855,000, while multifamily starts slid 0.5% to 556,000. On a yearly basis, the rate of single-family starts was down 20.8%, while multifamily was up 17.3%.
Despite the declines, the pace of building activity has actually remained relatively strong, Compass President Neda Navab said.
“While down from last year’s booming levels, housing permits and starts both remain above longer-term averages from the past 10 years,” Navab said in a statement. “Even with the boom in building activity over the past two years, the nation still faces a critical shortage of housing of all types and is still playing catch-up from the anemic building levels that characterized the 2010s.”
Permits, a leading indicator of future new-home supply, were down 2.4% month over month and 10.1% year over year to 1,526,000 units, while housing completions hit an annual rate of 1,339,000 in October, down 6.4% from September and up 6.6% from October 2021. Homes under construction rose 0.8% month over month and 17.5% year over year to 1,722,000.
“As builders pull back on starting new projects, they will have greater opportunity to bring to market the large backlog of homes in their pipelines that are already under construction,” First American deputy chief economist Odeta Kushi said. “The number of single-family homes under construction remains elevated due to construction delays brought on by labor and material shortages.”