The housing market may be in search of much-needed inventory, but it’s not likely to come from new home construction. Builders broke ground on fewer homes in September. Housing starts dropped 5.3 percent to a seasonally adjusted annual rate of 1.2 million, the Commerce Department reported Wednesday.
Broken out, single-family housing starts dropped 0.9 percent to 871,000 units, while multifamily starts—those for apartment buildings and condos—plunged 15.2 percent to 330,000. Overall housing permits—an indicator of future housing production—dropped 0.6 percent last month.
Some economists are blaming the softening on higher mortgage rates that are biting into housing affordability. Mortgage rates are nearing the 5 percent average. Also pressing into affordability are the builders who have had to raise their prices on buyers due to labor shortages and increases in material costs. The National Association of Home Builders does point to a decline in lumber prices recently but material costs and a high number of unfilled construction jobs continues to plague the market.