October Housing Starts: Homebuilding Activity Slows Again

Housing starts dropped to 1.43 million in October, down 4.2% from revised September 2022 figures and down 8.8% from October 2021, according to the U.S. Census Bureau.
Housing permits issued in October were down 2.4% from September and down 10.1% from a year ago, to 1.53 million (SAAR).
1.34 million (SAAR) homes were completed in October, down 6.4% from September and up 6.6% year-over-year.

October was a challenging month with disappointing inflation data — though more recent readings have been more positive — and soaring interest rates, and it is no surprise that home building activity reverted back to a downward trend, though the drop was not as severe as it was expected to be. Both starts and permits fell behind September levels and behind levels from one year ago. As the current affordability crisis burns on, builders are feeling demand for new homes slipping further away, depressing confidence in their ability to sell their completed projects at the prices they need. As a result, homebuilder sentiment dropped to the lowest level in the last decade, with the exception of a brief drop at the onset of the pandemic, a discouraging sign for the future of housing supply. Filling the housing deficit continues to be the clearest path to long-term housing affordability so with continual declines in building activity, affordability is likely to remain a significant hurdle in the housing market for the foreseeable future.