U.S. housing starts fall 5.2% in September, missing forecasts
Key Facts
U.S. housing starts fell an estimated 5.2% in September, according to the joint Census Bureau and Department of Housing and Urban Development report released on 20 October 2026. Starts reached a seasonally adjusted annual rate of 1,221,000 units, with monthly activity declining amid financing and cost pressures cited by homebuilders. September starts compared with August's revised rate of 1,288,000 units, the basis for the monthly comparison in the new release. The actual reading of 1.221 million units was below expectations of 1.3 million units, according to EL7's economic calendar. The monthly decline in construction preceded a drop in single-family homebuilder sentiment in October amid challenges related to mortgage costs and housing affordability.
The Census Bureau revised August housing starts up from the original estimate of 1,275,000 units as part of the revisions in the September report. Building permits for September reached a seasonally adjusted annual rate of 1,400,000 housing units, according to the joint government statement. Permits fell 0.2% from August, reflecting a smaller monthly decline than the estimated drop in housing starts over the same period. August's revised permit rate was 1,403,000 units, the previous level against which September permits were compared in the report. On an annual basis, building permits fell 3.0%, extending the decline in permits to the comparison with the same month a year earlier as well as the monthly comparison.
In the single-family segment, housing starts reached 859,000 units in September, according to the Census Bureau and the Department of Housing and Urban Development. Permits for this category totaled 845,000 units during the same month, on the seasonally adjusted annual basis used for overall residential construction activity. Single-family starts thus exceeded permits issued for these homes in September, while both rates remained below the sector total, which includes other housing categories. Single-family housing completions reached a seasonally adjusted annual rate of 840,000 units. The completion rate for this category was below both starts and permits, with activity levels differing across the permitting, construction and completion stages during the same month.
Across all housing categories, total completions reached a seasonally adjusted annual rate of 1,192,000 units in September, according to the government statement. Housing completions rose an estimated 2.2% from August, moving in the opposite direction to the monthly declines in housing starts and permits in September. However, completions remained 14.0% below their level in the same month a year earlier, despite the estimated monthly increase. The annual decline in completed homes was larger than the annual drop in permits, while completions and permits moved in different directions on a monthly basis. The total completion rate was also below the rate of housing starts in September, according to the seasonally adjusted annual figures for the various construction stages.
Against this backdrop, the National Association of Home Builders attributed weak builder sentiment to higher mortgage rates, among a range of pressures facing the sector. In its October statement, the association cited higher energy and material costs alongside financing burdens, which it listed among the reasons for declining confidence. It added that labor and building lot conditions had deteriorated, extending the challenges to project execution and site availability as well as costs. Robert Dietz, the association's chief economist, said housing faced "supply-side constraints and significant affordability challenges." Dietz's description combined obstacles to housing supply with affordability difficulties, as the association cited pressures from mortgage rates and construction inputs.
The National Association of Home Builders/Wells Fargo index of single-family homebuilder confidence fell to 29 points in October, according to the association's statement. On pricing, 43% of homebuilders cut prices during the same month as the affordability challenges described by Dietz persisted. Some 65% of builders offered sales incentives in October, with the reported sales measures including incentives alongside price reductions by some builders. These measures came in the month following the period covered by the government construction report, while the new confidence reading concerned single-family homebuilder conditions in October. The Census Bureau and the Department of Housing and Urban Development are scheduled to release the October construction report on 18 November 2026.