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2025-09-17 20:46:02
[US Housing Market Alert: Declining Mortgages, Falling Construction Starts, Fed Rate Cuts Fail to Resolve Inventory Dilemma] ⑴ US single-family home construction starts plummeted 7.0% in August to a seasonally adjusted annual rate of just 890,000 units. Meanwhile, building permits, a proxy for future construction, also fell 2.2% to 856,000 units. ⑵ Although the 30-year mortgage rate has fallen from 7.04% in mid-January to 6.35% last week, an 11-month low, a weak job market and a high inventory of unsold new homes continue to weigh heavily on construction activity. ⑶ Institutional data shows that new home inventory levels are approaching their late-2007 peak. Builders are continuing to reduce inventory pressures through price cuts and promotions. A National Association of Home Builders survey on Tuesday showed that industry confidence remains subdued. ⑷ The market generally expects the Federal Reserve to announce a 25 basis point interest rate cut on Wednesday to support the labor market. However, uncertainty about the economic outlook has stalled hiring, and weak job growth may mitigate the impact of the rate cut on the housing market. 5. The Federal Reserve paused its interest rate cuts in January due to inflation uncertainty caused by Trump's tariff remarks. Now it has restarted its easing policy, but the positive impact of falling mortgage rates may be offset by the weakness of the labor market.
