In September 2024, U.S. housing starts and new home purchase applications both experienced declines, highlighting a complex and shifting housing market. Housing starts dropped 0.5% from the previous month to an annualized rate of 1.354 million units, following a strong 7.8% surge in August. The decrease was mainly driven by a 4.5% decline in multi-family starts, while single-family home construction increased modestly by 2.7%. Regionally, significant declines occurred in the South, West, and Midwest, with the Northeast seeing a sharp 57.9% increase. These declines coincide with growing concerns over Florida's housing market slowdown, where 69% of homebuilders reported market conditions worse than expected due to rising inventories, high mortgage rates, and surging insurance premiums. Coupled with the impact of climate change and recent hurricanes, the southeastern real estate market may face rapid price declines due to weaker demand and growing supply.

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Similarly, new home purchase applications fell 6% month-over-month, consistent with seasonal trends. However, year-over-year data showed a 10.8% increase, reflecting ongoing demand, especially among first-time buyers who frequently use FHA loans, which made up 29% of total applications. Although new home sales decreased by 12.4% from August, demand remains strong, which should be supported by slightly lower mortgage rates given the Federal Reserve has begun lowering rates.

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However, despite the Federal Reserve's recent rate cuts, mortgage rates have unexpectedly risen. This increase is tied to the rise in 10-year Treasury bond yields, driven by investor caution. Mortgage rates now average 6.4%, up from earlier this year, impacting potential homebuyers hoping for lower rates and adding complexity to the housing market.

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Housing: Where Do the Candidates Stand?

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The Harris campaign has made housing affordability a central focus as homelessness and housing prices reach record highs. Her plan seeks to build three million new housing units over four years by expanding federal tax credits for builders and buyers. While the plan may boost supply, critics argue it could inflate demand without effectively overcoming zoning challenges in regions like Phoenix.

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In contrast, Trump’s next-term plans focus on reducing regulations in the permitting and zoning process to lower housing costs by accelerating construction. He also proposes a 10% tariff on all imports and a 60% tariff on Chinese goods, which could raise building material costs and potentially increase home prices. Additionally, his campaign promises mass deportations, which he claims will reduce housing demand. However, critics caution that deporting immigrants—who make up 30% of construction workers—could significantly impact housing supply.

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