US single-family housing starts, building permits tumble in September

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, the highest level in nearly three years, data from ​mortgage finance firm Freddie Mac showed. The higher borrowing costs are tracking ​Treasury yields as the US-Israeli war with Iran fans inflation.

A National Association of Home Builders survey on Monday showed sentiment among single-family homebuilders plunged in October to the lowest level ​since June 2012. The NAHB blamed rising material costs and mortgage rates ​as well as more expensive diesel and "worsening" labor conditions amid an immigration crackdown for ‌the ⁠deterioration in sentiment.

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, ⁠which is keeping home prices elevated.

Housing affordability has dominated campaign messaging ahead of the November 3 midterm election, which ​will determine control of Congress. President Donald Trump earlier ​this ⁠year refused to sign a bipartisan housing affordability bill, calling it "a big yawn" as he pressed Congress, including fellow Republicans resisting his demands, to first ⁠pass separate ​and contentious voting requirements.

Residential investment rebounded in ​the second quarter, also reflecting renovations, making a small contribution to gross domestic product. The ​rise followed five straight quarterly declines.