Housing starts increase in august as mortgage rates ease

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Housing starts in the U.S. rose by 9.6% in August, as reported by the Census Bureau, coinciding with a decline in mortgage rates. The seasonally adjusted annual rate of new residential building construction reached 1.356 million, reflecting a 3.9% increase from the same period in 2023.

Despite the rise in housing starts, permits for new construction, an indicator of future building activity, dropped by 6.5% compared to August of the previous year. The average mortgage rate for a 30-year fixed-rate loan decreased to 6.11%, down from its peak earlier this year, according to data from Mortgage News Daily.

The Federal Reserve’s monetary policies and the easing of mortgage rates have contributed to supporting the housing market. New home sales showed a 10.6% increase from June to July, and existing home sales rose by 1.3% over the same period.

As mortgage rates fluctuate, housing affordability continues to be a significant concern for potential buyers, influenced by broader economic factors and ongoing inflation control measures.