US housing starts fall 5.2% in September as mortgage rates near 7.5%

what happened

Groundbreaking on new US homes fell 5.2% in September to a seasonally adjusted annual rate of 1.221 million units, according to the Commerce Department. That was 6.4% below the 1.305 million analysts had expected and extended August's revised 5.9% decline. Single-family starts dropped 4.6%, while the volatile multi-unit segment slumped 6.7%.

Building permits, seen as a leading indicator, edged down 0.2% to 1.400 million units, slightly above consensus. Separately, pending sales of existing homes, per the National Association of Realtors, unexpectedly fell 7.3% last month, erasing the prior month's small gain.

Nationwide senior economist Ben Ayers said builders are pulling back as surging mortgage rates choke off demand, and he doubts activity will recover much before spring 2027.

why it matters

The 30-year fixed mortgage rate, which reached 7.5% last week, is the highest since November 2023. Rising Treasury yields, driven by war-related inflation fears, are pushing borrowing costs higher. For bond and dollar traders, the key question is whether mortgage rates will keep tightening financial conditions or, as NAR's chief economist Lawrence Yun suggests, are close to topping out.

market impact

US housing and mortgage rates: weak demand pressures construction and sales, while higher Treasury yields keep mortgage costs elevated

tags

instruments