New U.S. home construction declined in September and permit applications for single-family dwellings fell, adding to evidence that the highest mortgage rates in two decades are sapping demand and discouraging new builds, Bloomberg News reported. Residential starts decreased 8.1% last month to a 1.44 million annualized rate, according to government data released Wednesday. Single-family homebuilding dropped to an annualized 892,000 rate, the slowest since May 2020. Construction of multifamily dwellings also declined. Applications to build, a proxy for future construction, rose to an annualized 1.56 million units, led by multifamily properties. Permits for construction of one-family homes fell 3.1% to a more than two-year low of 872,000 in September. The housing market is bearing the brunt of the Federal Reserve’s interest-rate hikes as they aim to free the economy of stubborn inflation. The real estate sector is especially susceptible to rising borrowing costs, and the Fed is projected to push ahead with another 75 basis-point increase in early November.
