Americans May Finally Have Houses to Buy

More new homes were completed in September and builders began constructing more homes compared to the previous month, a silver lining for a housing market dealing with high borrowing costs and low supply.

Housing completions in September hit a little more than 1.45 million, an increase of 6.6 percent from the previous month, data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development showed on Wednesday. Single?family housing completions were close to 1 million, a jump of 5.3 percent from August.

Housing starts, the measure that tracks the beginning of building work, also rose in September by 7 percent on the previous month, indicating that builders were prepared to invest in construction. Nevertheless, the authorization of new building permits fell 4.4 percent last month from August.

The jump in housing starts for the month was smaller than expected, said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

"Building permits, the more forward gauge of activity, declined, signaling a slower pace of housing starts in the months ahead," she wrote in a note shared with Newsweek. "Higher mortgage rates and deteriorating homebuilder sentiment will weigh on single-family starts, although the need for inventory may provide some cushion for the downside."

Figures for multi-family housing, which may be facing more headwinds, could deteriorate in the future.

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"Builders in that sector are facing a more severe tightening of lending standards," Vanden Houten said.

Nicole Bachaud, Zillow's senior economist, said the rise in housing starts was a silver lining for the housing market and reflected an earlier uptick in permits.

"Housing completions have remained elevated for much of this year, providing more opportunities for buyers—often accompanied by incentives that help tip the scales of affordability in favor of buyers," she told Newsweek.

The Federal Reserve has hiked rates to 5.25-5.5 percent, a two-decade high, pushing up borrowing costs for housing, cars and business investment.

The expensive loans have put considerable pressure on the housing market as buyers are struggling to afford mortgage rates that have inched closer to 8 percent, the highest in more than two decades, according to lender Freddie Mac.

Prices are softening slightly as summer turns to fall, but remain high as inventory is low compared to demand. The average home value in the U.S. is up more than 1 percent this year, according to Zillow.

"As high mortgage rates seem to be the norm for the time being, the housing market will remain unaffordable for many until inventory levels are back up, with new construction being a significant role in the inventory outcome," Bachaud told

Newsweek.

This may explain why mortgage applications are declining. On Wednesday, the Mortgage Bankers Association said applications for new mortgages had decreased by nearly 7 percent for the week ending October 13, 2023.

"Applications decreased to their lowest level since 1995, as the 30-year fixed mortgage rate increased for the sixth consecutive week to 7.70 percent—the highest level since November 2000," said Joel Kan, the association's vice president and deputy chief economist.

For Bachaud, the outlook still points for a struggle for the market.

"With permits and starts continuing to end this year on a rocky level, future new construction completions will come back down from this year's highs and the overall housing market will remain tight," she said.

Source: https://www.msn.com/en-us/money/realestate/americans-may-finally-have-houses-to-buy/ar-AA1irOlc?ocid=msedgntp&cvid=8fcc7adea244478d9e0405f00e58e063&ei=8