A softness in multifamily construction underscored a housing starts slowdown in September as activity comes in well below economists’ expectations, CoStar reports.
Year to date, combined multifamily and single-family starts were 8.3% higher in the Northeast, but down across the other three regions, according to the National Association of Home Builders (NAHB). An NAHB monthly survey showed homebuilder confidence is the worst in 14 years.
Seasonally adjusted multifamily groundbreakings, including apartment buildings and condos with five or more units, declined 7.2% from August to a 349,000 annual rate, off 25.9% from a year earlier, according to a report Tuesday from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
The overall September starts total of 1.221 million, including housing, fell for a third consecutive month. It was nearly 100,000 below analyst expectations and would have been the lowest reading since COVID-19, if not for a disappointing May figure, noted Heather Long, chief economist at Navy Federal Credit Union.
“It’s no surprise that homebuilders are hitting the pause button,” she said in a statement. “Borrowing costs are at some of the highest levels in a quarter century.”
Long said sellers outnumber buyers by a record amount, and that’s putting pressure on the rental market.
Meanwhile, research firm Oxford Economics said Monday it has lowered its forecasts for U.S. housing starts, home sales and home price growth on the expectation that mortgage rates will remain elevated indefinitely.
As of last week, the 30-year, fixed-rate mortgage averaged 7.4%, flat from the prior week but well above the 6.27% in the same week a year ago, according to mortgage giant Freddie Mac.
Oxford estimates that higher interest rates since the start of 2026 have put homeownership out of reach for an additional 5 million households. The most qualified buyers are existing homeowners who have historically low mortgage rates from the pandemic, and that gives them little incentive to move, according to Nancy Vanden Houten, Oxford’s lead U.S. economist.
“We don’t expect a meaningful improvement in housing activity until around the end of 2027, when we look for mortgage rates to decline,” she said in a statement.
