In October, builders cut back on new projects, which caused the number of new homes being built in the U.S. to drop by 3.1%.
The government said Tuesday that the number of housing starts dropped from 1.35 million the previous month to 1.31 million the following month.
In one year, that many homes would be built if building goes at the same rate every month as it did in October.
Building new homes has dropped to its lowest level since July.
It wasn’t as good as what Wall Street thought it would be—a 1.34 million pace. All of the numbers have been changed to account for the seasons.
Building new homes is 4% less than it was a year ago.
More single-family homes being built dragged down the total number. In October, building multifamily homes grew by almost 10%.
The number of building permits, which show that new buildings will be built, dropped 0.6% to 1.42 million.
Important facts: In October, mortgage rates started to rise to 7%. This caused house builders to slow down on building new single-family homes. That drop in single-family homes starts to bring down the whole number.
Freddie Mac says the 30-year rate went from 6.12% on October 3 to 6.72% on October 31. Higher interest rates make it more expensive for people to borrow money to buy a home, which lowers demand.
Because of this, the number of single-family homes built fell 6.9% from September to October. On the other hand, building multifamily homes went up 9.8%.
Different parts of the U.S. had different building speeds. In the West, home building went up by about 21%, and in the Midwest, it went up by 9%. In the Northeast, however, starts dropped by 33%, and in the South, they dropped by 9%.
In October, permits, which show how many homes will be built in the future, were also lower than usual. Building permits for single-family homes went up by 0.5%, but building permits for multi-family houses went down by 3%.
In general, housing starts are a very unstable set of numbers. Still, the numbers show that builders put off starting on new single-family homes in October because mortgage rates went up a lot.
It’s also possible that hurricanes slowed down construction work. Hurricanes Helene and Milton probably had an effect on builders, which slowed down work especially in the South.
But builders are positive about the coming months because they think that a second Trump administration will bring lower mortgage rates and less red tape.
As of Monday, an industry poll showed that builders’ mood was at its highest level in seven months. Builders said they were sure they could sell newly constructed homes.
What do they mean? Bradley Saunders, a North America economist at Capital Economics, wrote in a note, “The drop in housing starts in October was exactly what we had expected given the hit to construction in the South from Hurricane Milton. The drop should partially reverse in November.”
“On top of that, we think that the recent rise in new home sales and the confidence of homebuilders will help housing starts to rise to a peak of 1.08 million [annualized] in the second half of 2025,” he said.
