Building Permits and Housing Starts Slip, but Completions Surge Year-Over-Year

U.S. Housing Market Sees Decline in Building Permits and Starts in September

The latest data from the U.S. Census Bureau for September 2024 reveals a decline in key housing market indicators, highlighting ongoing challenges in the residential construction sector. Both building permits and housing starts decreased, while housing completions showed a mixed performance.

Building Permits Down 2.9% as Overall Activity Slows

Privately-owned housing units authorized by building permits reached a seasonally adjusted annual rate of 1.428 million in September, a 2.9% drop from the revised August figure of 1.470 million. This also represents a 5.7% decrease compared to the September 2023 rate of 1.515 million. Despite the overall decline, single-family home permits showed resilience, increasing by 0.3% month-over-month to 970,000. However, permits for buildings with five or more units fell to 398,000, indicating slower demand in the multifamily housing sector.

Housing Starts Remain Flat, With Slight Decline from August

Housing starts in September reached an annual rate of 1.354 million, representing a minor 0.5% decline from the revised August figure of 1.361 million. This was also 0.7% below the September 2023 rate of 1.363 million. The single-family sector fared better, with starts increasing by 2.7% from August to reach 1.027 million units. In contrast, the multifamily segment continues to struggle, with starts for buildings of five units or more falling to 317,000.

Housing Completions Surge 14.6% Year-on-Year

The highlight of the report came from housing completions, which surged 14.6% compared to September 2023, reaching a seasonally adjusted annual rate of 1.680 million units. However, this is still a 5.7% decrease from the previous month’s estimate of 1.781 million. Single-family completions stood at 1 million units, a 2.7% drop from August, while multifamily completions came in strong at 671,000 units, supporting the supply side of the rental market.

Market Outlook: Bearish Sentiment for Residential Construction

Given the declining trend in building permits and relatively flat housing starts, the outlook for residential construction remains bearish. Rising interest rates and tighter credit conditions are likely constraining new projects, particularly in the multifamily sector. However, with housing completions rising year-over-year, the market may see some relief in inventory, though this could be short-lived if permit and start trends continue downward. Traders should remain cautious, as further tightening from the Federal Reserve could exacerbate these challenges in the coming months.