U.S. September Housing Starts and Permits - Signs of weakness building
September housing starts are clearly weaker than expected, -5.2% to 1221k, with both singles and multiples lower. Permits held up better, -0.2% to 1400k, but with multiples up and singles down the net message is for a slowing housing sector, restrained by rising mortgage rates.
Single starts fell by 4.6% after a 2.9% August increase while multiple starts fell by 6.7% in a third straight decline. The overall starts level is the lowest since May but single starts have not been this weak since September 2025.
Single permits fell by 4.0% after a 1.6% August decline, with September’s decline being the steepest since April 2025 and the level the loest since March 2023. Multiple permits are normally much more volatile than single and their 6.1% September increase after a 3.0% August decline is unlikely to be sustained.
The housing sector is under some pressure from rising mortgage rates and prospects for further Fed tightening, as signaled by yesterday’s very weak NAHB homebuilders’ index for October. Further weakness is likely in Q4, but if mortgage rates stabilize the housing sector may do so too by early 2027.
