U.S. Housing Market Faces Stormy Challenges Amid Rising Costs

U.S. single-family homebuilding decreased in October due to regional hurricane impacts and high mortgage rates. Despite a slight rise in permits, the housing market remains hampered by affordability issues and supply shortages. Economists project a restrained rebound in residential investment, reflecting ongoing economic challenges.

The U.S. single-family homebuilding sector experienced a notable decline in October, mainly attributed to the detrimental effects of Hurricanes Helene and Milton in the South, as well as persistent high mortgage rates. This downturn suggests a muted rebound in residential investment at the outset of the fourth quarter, as reported by the Commerce Department on Tuesday.

Higher borrowing costs, resulting from the Federal Reserve's monetary policy tightening to curb inflation, have battered the housing market. Despite some resilience shown by multi-family housing starts, single-family housing starts plummeted 6.9% with significant regional disparities. The data shows a substantial 10.2% drop in the hurricane-affected South while the Northeast recorded a staggering 28.7% decrease.

Amid limited new housing supply and elevated mortgage rates, economists caution that single-family construction may remain flat or decline in the coming months. Rising inventory of new homes and the limited availability of previously owned homes are likely to keep construction in a holding pattern, pending shifts in the economic landscape.

(With inputs from agencies.)