U.S. housing starts rebound in August after declining in July

WASHINGTON, Sept. 20 (Xinhua) -- New construction of U.S. homes rebounded in August after falling in the previous month, but building permits saw a steep decline, the U.S. Census Bureau reported Tuesday.

The report showed that privately-owned housing starts in August were 12.2 percent above the revised July figure but 0.1 percent below the August 2021 rate.

In July, new residential construction dropped by a revised 10.9 percent as the housing market cooled amid rising interest rates.

Privately-owned housing units authorized by building permits in August were 10.0 percent below the revised July rate and 14.4 percent below the August 2021 level.

"The surprising gain in total starts is a welcome reprieve from the onslaught of negative housing data received recently," Charlie Dougherty and Patrick Barley, economists at Wells Fargo Securities, wrote in an analysis.

"That said, August's sharp decline in permits is a reminder that builders and developers are likely to continue scaling back production in response to retreating demand and higher financing costs," they noted.

The overall drop in building permits was "broad-based," with single-family permits falling 3.5 percent and multifamily permits plunging 17.9 percent, they added.

The Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, slid 1.0 percent to 89.8 in July, marking the second consecutive month of decline, according to a report released in late August by the National Association of Realtors.

According to the association, housing affordability in June plummeted to its lowest level since 1989. Accounting for a 30-year fixed-rate mortgage and a 20-percent down payment, the monthly mortgage payment on a typical home jumped to 1,944 dollars, an increase of 54 percent, or 679 dollars, from one year ago.

A steep rise in mortgage rates resulted from aggressive actions by the U.S. Federal Reserve in its efforts to get record inflation under control.

The Federal Reserve has enacted four rate hikes since March, taking its benchmark rate to a range of 2.25 percent to 2.5 percent, and is expected to raise interest rates by another 75 basis points at this week's meeting.

Mortgage rates recently climbed above 6 percent, the highest point since late 2008 and more than double their level a year ago.