US housing starts slump in September; mortgage rates move above 3%

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U.S. housing starts declined in September from the previous month, the Census Bureau reported this week.

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Housing starts fall

housing starts

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Housing starts in September reached a seasonally adjusted annual rate of 1,555,000, the Census Bureau reported.

The September rate marked a 1.6% decline from the previous month. However, the rate increased by 7.4% from September 2020.

Furthermore, single‐family housing starts reached a rate of 1,080,000, virtually unchanged from the revised August figure. Meanwhile, the September rate for units in buildings with five units or more reached 467,000.

Meanwhile, privately owned housing units authorized by building permits fell by 7.7% from August to September. However, the September 2021 rate of 1,589,000 came in virtually unchanged from September 2020.

Mortgage rates reach highest level since April

Prospective homebuyers are currently facing the highest mortgage rates since April, according to Freddie Mac.

The 30-year fixed rate mortgage weekly average reached 3.05% as of Oct. 14. The rate ticked up from 2.99% the previous week and 2.81% a year ago.

Meanwhile, the 15-year rate reached 2.3%, up from 2.23% the previous week. However, the 15-year rate came in down from 2.35% from a year ago.

Construction material prices rise

Construction material prices have continued to rise over the last year.

According to the Associated General Contractors of America, prices contractors paid for materials came in higher than prices contractors charged during the 12-month period ending in September.

“Construction materials costs remain out of control despite a decline in some inputs last month,” said Ken Simonson, the association’s chief economist. “Meanwhile, supply bottlenecks continue to worsen.”

The producer price index (PPI) for nonresidential construction increased by 5.2% over the last 12 months, the AGCA reported. However, the index fell by 0.9% last month.

Among metal products, the AGCA reported the PPI for steel mill products increased by 134% compared to last September. Meanwhile, the index for copper and brass mill shapes jumped by 39.5%. The index for aluminum mill shapes increased 35.1%.

Amid ongoing material shortages and supply-chain disruptions, the AGCA argued removing tariffs would alleviate some of the current pressure.

“The tariffs on lumber, steel, aluminum, and many construction components have added fuel to already overheated prices,” AGCA CEO Stephen E. Sandherr said. “Ending the tariffs would help immediately, while other steps should be taken to relieve supply-chain bottlenecks.”

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