U.S. housing starts fell 5.2% in September to a seasonally adjusted annual rate of 1.221 million, significantly missing the 1.30 million units expected by analysts. The drop was driven largely by a decline in single-family homebuilding as 30-year fixed mortgage rates climbed to an average of 7.40%, the highest level in nearly three years. August’s starts were revised upward to 1.288 million from the previously reported 1.275 million.
Building permits, a leading indicator for future construction, showed marginal resilience by edging up to a rate of 1.40 million units, slightly exceeding the consensus estimate of 1.39 million. Despite the small beat in permits, homebuilder sentiment remains near multi-year lows due to high financing costs, labor shortages, and elevated material prices, suggesting continued weakness in residential investment.