What happened: Housing starts and permits are still struggling to match levels from a year ago. But despite falling homebuilder sentiment, starts increased on a monthly basis following higher permits last month.
Why this matters: Homebuilder sentiment fell again in September, and annual trends for permits and starts reflect the challenges builders are facing by falling back from levels seen last fall. However, in a glimmer of a silver lining, there was an increase in starts in September, likely a response to the uptick in permits pulled last month. As high mortgage rates seem to be the norm for the time being, the housing market will remain unaffordable for many until inventory levels are back up, with new construction being a significant role in the inventory outcome. Housing completions have remained elevated for much of this year, providing more opportunities for buyers – often accompanied by incentives that help tip the scales of affordability in favor of buyers. But as permits and starts continue to end this year on a rocky level, future new construction completions will come back down from this year’s highs and the overall housing market will remain tight.