HMM: ‘Millions Of Homes Will Stay Unbuilt’: What Builders See That Policymakers Don’t.

Recent data from the Census Bureau reveals housing starts fell 3.1% below September’s revised estimate, landing at a seasonally adjusted annual rate of 1,311,000 units. Building permits declined 0.6% from September, marking a 7.7% drop from October 2023.

The numbers create friction with recent comments from Federal Reserve officials, including Minneapolis Fed President Neel Kashkari, who, according to HousingWire, suggested housing demand remains robust enough to warrant higher mortgage rates.

The data tells a different story, with existing home sales hitting their third consecutive year of record lows when adjusted for workforce size.

Builder behavior offers telling insights into market conditions. HousingWire said construction companies have shown increased optimism when mortgage rates approach 6%, but consistently pull back when rates climb between 6.75% and 7.5%. The pattern extends beyond single-family homes, with multiunit permits already at recession levels.

It’s difficult to see sustained mortgage rate reduction so long as Congress is spending $2 trillion in funny money every year for the foreseeable future.