Higher interest rates continue to weigh on the real estate market as housing starts in the United States were weaker-than-expected last month. Builders broke ground on houses at a seasonally adjusted annual rate of 891,000 units in August, representing a 0.9 percent rise from the downwardly revised July estimate of 883,000 units, according to the U.S. Department of Commerce. Compared to last year, overall housing starts were up 19 percent.
The results were below estimates for the fifth consecutive month. On average, economists expected overall housing starts to increase to a rate of 917,000 units. Groundbreaking on multi-family units, which have been a large driving force in housing starts as investors purchase rental units to create cash-generating investments, struggled in the wake of higher interest rates.
Single-family housing starts, the largest segment of the market, increased 7.0 percent in August to an annualized rate of 628,000 units. Single-family starts have posted a decline in four of the last six months. In July, higher interest rates pushed single-family starts to their lowest level since November. Meanwhile, breaking ground on multi-family homes with at least five units sank 9.4 percent to 252,000 units, compared to 278,000 units in July.