ConDig (20-Nov–24) Construction of new homes in the United States fell 3.1% on October amid an uptick in mortgage rates.

Overall housing starts decreased 3.1% in October to a seasonally adjusted annual rate of 1.31 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

It comes as average monthly mortgage rates increased a quarter-point from 6.18% to 6.43% between September and October, according to Freddie Mac.

Single-family starts tumbled 6.9% to a 970,000 seasonally adjusted annual rate. But on a year-to-date basis, single-family construction is up 9.3%. The volatile multifamily sector, which includes apartment buildings and condos, increased 9.6% to an annualized 341,000 pace but are down 29.3% on a year-to-date basis.

Housing permits, which are a sign of future construction activity, edged down 0.6% to a 1.42 million unit annualized rate in October. Single-family permits, however, increased 0.5% to a 968,000 unit rate and are up 9.4% on a year-to-date basis. Multifamily permits decreased 3.0% to an annualized 448,000 pace.

“Although housing starts declined in October, builder sentiment improved for a third straight month in November as builders anticipate an improved regulatory environment in 2025 that will allow the industry to increase housing supply,” said Carl Harris, chairman of the National Association of Home Builders (NAHB).

“While multifamily starts were up in October, the number of apartments under construction is down to 821,000, the lowest count since March 2022,” said NAHB Chief Economist Robert Dietz. “Further interest rate cuts from the Federal Reserve through 2025 should result in lower interest rates for construction and development loans, helping to lead to a stabilization for apartment construction and expansion for single-family home building.”