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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 50 November 2024 J O U R N A L HOUSING STARTS RISE FOR SECOND STRAIGHT MONTH T he U.S. Census Bureau and the U.S. Department of Housing & Urban Development (HUD) have announced new residential construction statistics for September 2024. Single-family housing starts in September improved for the second consecutive month, as builder sentiment has improved. HUD and the Census Bureau found that privately owned housing starts in September were at a seasonally adjusted annual rate of 1,354,000, 0.5% below the revised August estimate of 1,361,000 and 0.7% below the September 2023 rate of 1,363,000. Single-family housing starts in September were at a rate of 1,027,000— 2.7% above the revised August figure of 1,000,000. The September rate for units in buildings with five units or more was 317,000. "Single-family starts increased for the second consecutive month, which aligns with the improvement in homebuilder sentiment over the last two months," First American Deputy Chief Economist Odeta Kushi said. "Builders improved outlook is likely due to the beginning of the Fed's easing cycle and expectations of lower interest rates in 2025." For the first time in four years, the Federal Reserve has slashed its bench- mark interest rate in mid-September, a move to force lower borrowing costs for consumers and businesses. The rate cut of a full half-point to a new range of 4.75% to 5.0% was announced by Federal Reserve Chair Jerome H. Powell after the Federal Open Market Committee (FOMC) meeting. The move by Powell is in response to the fight against inflation, after the Fed kept rates at an all-time 23-year high for more than a year. "Builder sentiment rose to 43 in October, also marking the second con- secutive monthly increase," Kushi noted. "However, sentiment still remains in negative territory, below the breakeven mark of 50." Privately owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,428,000, 2.9% below the revised August 2024 rate of 1,470,000, and Lending/Originations 5.7% below the September 2023 rate of 1,515,000. Single-family authorizations in September were at a rate of 970,000, which was 0.3% above the revised August figure of 967,000. Authorizations of units in buildings with five units or more were at a rate of 398,000 in September. "Permits are a leading indicator of future starts, and they increased for the third consecutive month in September, a positive sign for a supply-starved hous- ing market," Kushi added. "The housing market remains structurally under- built, and homeowners with locked- in low mortgage rates are keeping existing-home inventory limited. More groundbreaking is needed to bridge the gap between supply and demand." That "lock-in" rate may continue as Freddie Mac reports that the 30-year fixed-rate mortgage (FRM) averaged 6.44% as of October 17, 2024, up from the previous week when it averaged 6.32%. A year ago at this time, the 30-year FRM averaged 7.63%. As Zillow reports, the average U.S. home value is $359,892, up 2.7% over the past year, which may further cause affordability issues for potential home buyers. In terms of housing completions, privately-owned housing completions were reported at a seasonally adjusted annual rate of 1,680,000 in September, 5.7% below the revised August estimate of 1,781,000, but 14.6% above September 2023's rate of 1,466,000. Single-family housing completions in September were at a rate of 1,000,000—2.7% below the revised August 2024 rate of 1,028,000. The September rate for units in build- ings with five units or more was 671,000. Robert Frick, Corporate Economist with Navy Federal Credit Union, added, "Builder confidence may be up, but so are mortgage rates, which must be cool- ing builder enthusiasm for adding even more inventory to the already saturated new home market. With the economy strengthening and the 10-year Treasury yield up, even the Fed's expected rate cuts aren't a guarantee that we'll see sub- 6% mortgage rates anytime soon." "Despite pent-up demand in the housing market, elevated financing costs continue to challenge both buyers and