According to the Securities Times app, new home construction in the USA slowed down in September, with the decrease in multi-family residence projects offsetting the increase in single-family residence construction.

According to government data released on Friday, after a sharp rebound in August, the number of new home constructions in September dropped by 0.5% to an annualized rate of 1.354 million units, slightly higher than the expected 1.35 million units.

The number of single-family residence construction starts increased by 2.7% to an annualized rate of 1.03 million units, reaching the highest level in five months. Meanwhile, multi-family residence construction starts declined by 9.4%, hitting a four-month low.

An indicator measuring future construction activity, building permits, dropped by 2.9% to an annualized rate of 1.43 million units. Single-family residence building permits increased by 0.3% to 0.97 million units.

Although there was a slight increase in single-family residence construction starts, the rate is still lower than the frenzied pace at the end of 2021 and early 2022 when mortgage rates were close to 3%, and a historical lack of existing homes for sale drove demand for new homes.

However, with the Federal Reserve raising interest rates to the highest level in 20 years, demand weakened, ultimately leading to the highest level of new home supply by homebuilders in 16 years.

Since 2022, residence construction has had the largest impact on the third quarter Gross Domestic Product (GDP). Prior to the data release, the GDPNow forecast from the Atlanta Fed indicated that residential investment would decrease by 0.43 percentage points following a decrease of 0.11 percentage points in the second quarter.

Regionally, two out of four regions saw an increase in the single-family residence start rate, with the southern region growing by 6.6%, reaching its highest point in five months, and the northeast region growing by 10.6%.

With mortgage rates hitting a two-year low in mid-September and recently rebounding, sustained housing recovery still needs time. Nonetheless, following the Federal Reserve's 50 basis point rate cut last month, builders expressed optimism about the prospect of lower housing financing costs in recent earnings conference calls.

Senior economist Sal Guatieri of BMO Capital Markets stated in a report: 'Given that affordability remains an urgent issue in many areas, housing construction may stall until the Federal Reserve enters an easing cycle and mortgage rates drop another percentage point.'

CEO Jeffrey Mezger of kb home mentioned that the reduction in borrowing costs should revitalize the resale market, leading to stronger demand for new homes.

The new housing start report indicates a 5.7% decrease in the completion of new single-family residences, equivalent to an annual rate of 1.68 million units, while the number of projects under construction fell by almost 2%, to nearly a three-year low.

New residential construction data fluctuates widely, with government reports indicating that 90% of people believe the monthly change ranges between a decline of 13.5% and an increase of 12.5%.