The residential construction market in the South showed significant signs of strain in October, reflecting the impact of rising interest rates and slower demand. All three main indicators—building permits, housing starts, and completions—declined, according to the latest data from the Census Bureau.
Building permits fell to a seasonally adjusted annual rate of 752,000 in October, down 1.8% from September and marking the lowest level since June 2020.
- Permits have now declined nearly 13% compared to the same time last year, indicating a pullback in new residential projects.
Housing starts dropped even more sharply, falling 8.8% to 666,000, the lowest level since July. Starts are down 7.8% year-over-year, underscoring the challenges faced by homebuilders in breaking ground on new projects.
Housing completions also fell, declining 7.6% to 794,000, the weakest rate since August 2023. Completions are down 1.2% from a year ago.
One bright spot emerged in the single-family segment, where building permits rose 0.9% to 560,000 in October. However, the optimism was tempered by steep declines in single-family housing starts, which fell 10.2%, and completions, which dropped 3.3%.
- This suggests that while there is some appetite for new single-family homes, the broader market dynamics continue to weigh heavily on construction activity.
Nationally, the numbers provided little solace. Building permits across all housing categories fell 0.6% in October, while housing starts declined 3.1%, and completions dropped 4.4%. The sharper-than-expected declines also disappointed economists, who had anticipated permits to increase by 1.0% and starts to fall by a more modest 1.1%.
- The more pronounced slowdown highlights the increasing pressure on the housing sector as borrowing costs rise and affordability becomes a growing concern for potential buyers.
Bottom Line: Rising rates and softer demand are having a clear impact on residential construction, with October’s declines underscoring the growing challenges for the housing market. While single-family permits offered a glimmer of hope, the broader decline across starts and completions highlights the uphill battle faced by builders.
