Live news: US mortgages fall to 4-month low

The rate of new US home construction fell to a five-month low as high mortgage rates dampened demand.

U.S. housing starts in December fell 1.4 percent month-on-month to an annual pace of 1.38 million, the lowest level since July, the Commerce Department said Thursday. It missed investors’ estimates for a lower drop of 1.36 million.

The number of households that started housing was lower last month, down 18.9 percent from November. Single family starts, however, rose for the first time in four months to 11.3 percent.

Permits to build homes, considered a market leader, fell 1.6 percent from the previous month to an annual pace of 1.3 million — the lowest since May 2020 — and missed Investors estimate for 1.37 million.

Single-family home permits fell 6.5 percent from November and 34.7 percent from a year ago, but easing mortgage payments are likely to boost single-family permits. in the coming months as building capacity improves.

“Single-family permits tend to be widely viewed as mortgage applications, which appear to be shaping up to be a — very modest — recovery in lower mortgage rates since the end of October,” said a Kieran Clancy, senior American economist at Pantheon Macroeconomics.

The 30-year mortgage rate averaged 6.3 percent last week, down from November’s high of 7.08 percent, according to Freddie Mac.

“The big picture here is that most of the downward changes in construction requests in response to the drop in demand since the end of 2021 are over, although the prices of new homes are more explosive. It sucks,” Clancy said.

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