Disappointing housing permits show why we need 6% mortgage rates

"Homebuilders in the U.S. are cautiously optimistic as mortgage rates have dropped near 6%, offering a potential boost to a sluggish housing market. Despite disappointing housing permit data, this dip in rates could revitalize homebuilding activity, which has been weighed down by elevated mortgage rates and growing home inventory. Housing permits, which have been declining since early 2022, took another downturn today with the latest housing starts data."

"Building permits: Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,312,000. This is 3.7 percent below the revised July rate of 1,362,000 and is 11.1 percent below the August 2024 rate of 1,476,000. Single-family authorizations in August were at a rate of 856,000; this is 2.2 percent below the revised July figure of 875,000. Authorizations of units in buildings with five units or more were at a rate of 403,000 in August."

Mortgage rates near 6% offer potential stimulus for U.S. homebuilding after a period of elevated rates that suppressed activity. Housing permits fell to a seasonally adjusted annual rate of 1,312,000 in August, down 3.7% month-over-month and 11.1% year-over-year. Single-family authorizations totaled 856,000 in August, a 2.2% decline from July, while multi-unit authorizations were 403,000. Residential construction has experienced four consecutive months of job losses and accumulating builder inventory. Permits have declined since early 2022 and are approaching levels below those seen during the COVID-19 recession. The Federal Reserve is expected to cut the funds rate, and mortgage rate movements will determine any recovery in building.

Read at www.housingwire.com