Region Archives: United States

On Oct. 22, Trump signed an executive order directing the Federal Housing Finance Agency (FHFA) to create a pilot program that would cancel mortgage premiums once borrowers “have satisfied their equity requirements based on the current market value” and to make permanent its title insurance waiver pilot program. The order also creates a Task Force on Manufactured Housing Innovation, which FHFA Director Bill Pulte and HUD Secretary Scott Turner will co-chair, and requires the Agriculture and Veterans Affairs secretaries to lower interest rates for single-family home loans issued through their departments. Through the order, which Trump signed less than two weeks before the 2026 midterm elections, the White House said the president “is lowering the costs of single-family homeownership & mortgages, & removing unnecessary red tape to make homeownership more affordable for all Americans.”

The total market share of non-site-built single-family homes (modular and panelized) was just 3% of single-family homes in 2025, according to NAHB analysis of completion data from the U.S. Census Bureau’s Survey of Construction (SOC). This matched the 3% market share recorded in both 2023 and 2024. The market share of non-site-built homes has been steadily declining since the early 2000s, despite growing interest in non-site-built construction. This low market share runs counter to some media commentary that suggests recent gains in off-site construction. Nonetheless, there is potential for market share gains in the years ahead as builders seek to improve productivity in the residential construction sector. In 2025, approximately 30,000 single-family homes were built using modular (14,000) and panelized/pre-cut (16,000) construction methods, out of 975,000 completed single-family homes.

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The yield on long-term 10Y US Treasury bonds remains close to multi-decade highs even after some relief in recent days. The 10Y yield eased to around 5.1% yesterday, but remains roughly 50 bps higher than before Chair Warsh’s Jackson Hole speech as markets have priced a more hawkish Fed path. The move has already tightened financial conditions, lifting mortgage and corporate borrowing costs and raising the hurdle rate for investment. As today’s chart shows, the 100 bps rise in 10Y yields this year has been driven mainly by expectations of Fed tightening and a wider term premium, rather than by a major shift in growth or inflation fundamentals.  …Why this matters: Higher yields will continue to pressure interest-rate-sensitive areas such as housing and credit-dependent spending, but they do not necessarily imply a broad downturn. Much of the private sector remains insulated by fixed-rate borrowing, relatively low debt-service burdens and strong corporate balance sheets.

Single-family housing starts declined in September as builders faced higher financing, building material costs, and ongoing labor shortages. Overall housing starts decreased 5.2% in September to a seasonally adjusted annual rate of 1.22 million units. This pace reflects the number of housing units builders would begin over the next 12 months if September’s activity were sustained. Within the total, single-family starts decreased 4.6% to an 859,000 seasonally adjusted annual rate, the lowest level in a year. However, single-family starts were up 2.6% compared to September 2025. On a year-to-date basis, single-family starts are down 4.0%, reflecting continued challenges facing home builders. Given recent volatility, the three-month moving average provides a clearer signal, falling to 878,000 units. Multifamily starts, which include apartment buildings and condominiums, decreased 6.7% from August to September to an annualized 362,000 pace. The three-month moving average for multifamily construction has trended lower to 415,000 units, and activity is 24.9% lower compared to year-earlier levels.

The Federal Reserve’s inflation fight is running into a growing complication: The housing market is slumping even as broader price pressures persist. Housing data deteriorated further in September, according to separate reports Tuesday, adding to an already complicated policy landscape for the central bank as it contemplates its next move on interest rates. Things appear poised to get worse before they get better. If the Fed raises short-term rates as expected over the next several months, mortgage rates that are already at 7.43% could push even higher, putting a further damper on affordability. Higher home borrowing costs have coincided with a general rise in inflation and a housing shortage. “The housing market is about to go into a deep sleep unless Washington can do a 180 on its policies and make the cost of a new home more affordable,” wrote Chris Rupkey, chief economist at Fwdbonds. 

Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,400,000. This is 0.2 percent below the revised August rate of 1,403,000 and is 3.0 percent below the September 2025 rate of 1,444,000. Single-family authorizations in September were at a rate of 845,000; this is 4.0 percent below the revised August figure of 880,000. Authorizations of units in buildings with five units or more were
at a rate of 503,000 in September. …Privately-owned housing starts in September were at a seasonally adjusted annual rate of 1,221,000. This is 5.2 percent (±11.8 percent)* below the revised August estimate of 1,288,000 and is 7.4 percent (±11.5 percent)* below the September 2025 rate of 1,319,000. Single-family housing starts in September were at a rate of 859,000; this is 4.6 percent (±10.0 percent)* below the revised August figure of 900,000. The September rate for units in buildings with five units or more was 349,000.

Homebuilders are feeling the most pessimistic about the new-construction market in 14 years, as surging mortgage rates keep would-be buyers on the sidelines this fall. Builder confidence in new single-family home sales shed three points month over month, bringing the NAHB/Wells Fargo Housing Market Index (HMI) down to 29. This is the lowest HMI since June 2012. For context, builder sentiment has now remained below 40 for 18 consecutive months. NAHB Chairman Bill Owens ascribes the sharp pullback to soaring borrowing costs and broader economic headwinds. …Last Thursday, Freddie Mac reported that the average rate on 30-year fixed home loans held steady week over week at 7.4%, a three-year high fueled by a global bond selloff that pushed up 10-year Treasury yields. While less visible than earlier this year, the Trump Administration’s anti-immigration crackdown continues to negatively impact the residential construction industry across the U.S.

Rising mortgage rates, energy and material costs, and worsening labor and lot conditions have pushed builder sentiment to 29, a 14-year low …“Housing remains squeezed by supply-side constraints and significant affordability challenges,” said NAHB Chief Economist Robert Dietz. “Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines. As a result, buyer traffic has fallen to its lowest level since April 2012, excluding the pandemic’s onset in April 2020.” The survey found that 43% of builders cut prices in October. The average price cut remained at 6% for the seventh consecutive month. Meanwhile, 65% of builders reported using sales incentives in October, the 19th straight month at least 60% of builders have done so. …The index measuring current sales conditions fell two points to 33, the index gauging future sales expectations dropped five points to 32 and the index charting prospective buyer traffic fell five points to 18.

WASHINGTON – US single-family homebuilding and permits for future construction fell sharply in September as higher mortgage rates suppressed demand, suggesting residential investment resumed its declining ​trend in the third quarter. Single-family housing starts, which ‌account for the bulk of homebuilding, dropped 4.6% to a seasonally adjusted annual rate of 859,000 units last month, the Commerce Department’s Census Bureau said on Tuesday. Single-family building permits decreased 4.0% to a rate of 845,000 ‌units. Mortgage ​rates have surged in recent weeks, with ⁠the 30-year fixed rate ⁠averaging 7.40% last week. …Slumping ‌sales have led to a glut of unsold houses on the market, further reducing the incentive for developers to break ground on new single-family housing projects. Despite the overhang of new ⁠single-family homes, there is a national housing shortage. …Residential investment rebounded in the second quarter, also reflecting renovations. The rise followed five straight quarterly declines.

The Producer Price Index for final demand was up 1.3% in September, after rising 0.5% in August. Compared to a year ago, final demand prices were up 6.3%. The price of goods used in new residential construction (including energy) was up 1.8% over the month and up 9.7% from last year, while the price of services was up 2.2% over the month and up 11.3% from last year. …The goods component represents ~60% of the total. …Energy input prices rose 13.0% in September and were 64.1% higher than a year ago. Building material prices were up 0.4% in September and up 5.5% compared to one year ago, the highest level since 8.0% in December 2022. Outside of energy products, particleboard and fiberboard prices rose 3.5% over the month and were up 7.8%. Softwood veneer and plywood prices were up 2.7% over the month and 15.9% higher than a year ago.

U.S. kitchen cabinet sales fell 4.3% in August 2026 from a year earlier to $177.6 million, according to the Kitchen Cabinet Manufacturers Association (KCMA), whose Trend of Business report covers 47 participating manufacturers. Custom cabinet sales rose 12.2% to $54.0 million, semi-custom sales fell 9.0% to $95.0 million and stock sales fell 13.6% to $28.6 million. The number of cabinets shipped fell 11.4% to 437,697. In January–August, participants’ sales fell 6.3% to $1.41 billion. Custom sales fell 0.1% to $393.0 million, semi-custom fell 8.5% to $792.0 million and stock fell 8.3% to $228.7 million. Cabinet quantity fell 9.7% to 3.63 million. KCMA estimates the overall U.S. cabinet market for 2026 at $20.9 billion in sales and 92 million cabinets. [END]

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Last week, the University of Michigan reported that its consumer sentiment index fell below market expectations in October, reaching its lowest point since May’s record low level. In addition, US consumers are becoming increasingly pessimistic on the inflation outlook, expecting inflation to average 3.5% per year over the next five years. Yet today’s chart illustrates that breakeven inflation – the level of inflation expected by bond markets – is holding steady even as consumer inflation expectations remain far above their pre-pandemic average. This suggests that consumers remain more concerned about persistent price pressures than financial markets, potentially weighing on spending decisions. Why this matters: Elevated energy prices and higher borrowing costs are adding to the squeeze, leaving consumer demand vulnerable as confidence weakens. The October Fed meeting will test whether the central bank needs to extend its tightening cycle following September’s rate hike. We expect one further hike this year, followed by a pause as the Fed assesses the cumulative impact of tighter policy.

Higher energy prices pushed inflation to a four-month high in September, keeping pressure on the Fed as inflation has remained above its 2% target for more than five years. Gasoline prices remained the largest driver of headline inflation, accounting for over half of the monthly increase. On a non-seasonally adjusted basis, the Consumer Price Index (CPI) rose by 3.7% in September from a year ago, following a 3.4% increase last month. …The “core” CPI, excluding the volatile food and energy components, increased by 2.6% over the past twelve months. The housing shelter index, which makes up a large portion of the core CPI, rose 3.2% over the year, following a 3.0% increase last month. …The index for shelter, which makes up more than 40% of the “core” CPI, rose by 0.4% in September, following a 0.3% increase last month. The index for owners’ equivalent rent (OER) and rent of primary residence (RPR) increased by 0.3% and 0.2% over the month.

Labor shortages in the home building industry are becoming more widespread, according to recent results from the NAHB/Well Fargo Housing Market Index (HMI) survey. The September 2026 HMI survey asked builders about shortages in 16 specific trades. The percentage of builders reporting a shortage (either serious or some) of labor they employ directly ranged from a low of 33% for excavators and building maintenance managers to a high of 58% for workers who perform finished carpentry. …At 47%, the current 9-trade shortage percentage is now higher than it had been at any time during the boom period of 2004-2006, when total housing starts were consistently over 1.8 million annually. In contrast, starts in August of 2026 came in at a seasonally adjusted annual rate of under 1.3 million.

Existing home sales rose after three months of declines as improved inventory gave buyers more negotiating power. As buyers wait for rate relief, homes are sitting on the market longer and for-sale inventory reached the highest level in over a decade. Despite the increase, August and September sales remained the slowest this year. With mortgage rates back above 7% since mid-September, home sales are likely to stay sluggish over the next few months. Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 1.5% to a seasonally adjusted annual rate of 3.99 million in September, according to the National Association of Realtors (NAR). This marked the second-lowest level since July 2025 and only the third time since October 2024 that sales dropped below 4.0 million. On a year-over-year basis, sales were 2.2% lower than a year ago

SEATTLE — U.S. pending home sales are down to their lowest level since spring 2014—with the exception of April 2020, when the onset of the pandemic ground the housing market to a halt. This is according to a new report from Redfin.  Pending home sales declined 4% from a month earlier in September on a seasonally adjusted basis—the biggest monthly drop in more than three years. This is a real-time indicator of what’s happening in the housing market; fewer homes went under contract in September largely because mortgage rates rose steadily, surpassing 7% by the end of the month. …For the first time in three years, pending home sales declined in all 50 of the most populous U.S. metros. The last time that happened was September 2023, which was also the last time mortgage rates surpassed 7% for a sustained period. 

Consumer sentiment was little changed this month, inching down a scant 1.8 index points from September. While year-ahead expectations for personal finances and business conditions crept up slightly, buying conditions for durables plummeted amid high prices and borrowing costs. Increases in sentiment among Democrats and Republicans were offset by a decline among independents this month. Overall, sentiment for lower-income consumers and those with smaller stock portfolios dropped steeply this month, groups that have fewer resources to weather increases in prices. Frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year. Year-ahead inflation expectations ticked up from 4.6% last month to 4.7% this month. …Long-run inflation expectations also stepped up from 3.4% in September to 3.5%. 

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The Bureau of Labor Statistics (BLS) reported that headline inflation accelerated to 3.7% year-over-year in September, slightly exceeding market expectations in light of rising energy prices. In addition, markets expected inflation to broaden beyond energy, with core inflation also coming in hotter than expected at 2.6% YoY.  Today’s chart breaks down the contribution of key categories to CPI momentum (4-month moving average). While the crack spread (a measure of refinery margins) stabilized and crude oil prices increased, there is little evidence of widespread pass-through to a wide array of prices. Outside energy, inflation is running at a 2.1% annualized pace since mid-year, largely in line with the Federal Reserve’s 2% target. With oil prices remaining above $100 / barrel for a protracted period, markets continue to price in further rate hikes, expecting four more by mid-2027. We believe that the market is misreading the Fed’s hawkish rhetoric. Typically, the Fed pivots when accelerating core inflation coincides with a strong labour market, yet today’s data is not particularly convincing in this regard.