The US housing market is deteriorating sharply, with pending home sales hitting an all-time low and housing starts falling well below expectations, complicating the Federal Reserve's fight against inflation.
01Summary
- 01Pending home sales fell 7.3% in September, an all-time low in records going back to 2001, far worse than the 0.4% decline expected.
- 02Housing starts dropped 5.2% in September, against forecasts of a 0.4% decline, while building permits missed expectations.
- 03The 30-year fixed mortgage rate averaged about 7.6% in September, up from under 3% five years ago.
- 04Single-family permits fell to 845,000 in September, the lowest since 2023, and home builder sentiment is at a 14-year low.
- 05Goldman Sachs forecasts residential investment to fall 2.5%, 4%, and 1% over the next three quarters, with existing home sales remaining 26% below pre-Covid levels.
02Why it matters
This matters as rising mortgage costs and falling housing activity can dampen consumer confidence and economic growth, while the Fed may still raise rates to curb persistent inflation, further straining affordability for homebuyers.
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