US housing market mired in recession as mortgages hover close to multi-decade high



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US housing market mired in recession as mortgages hover close to multi-decade high

On Thursday, data from Commerce Department had unveiled that overall US housing starts fell as much as by 1.3 per cent last month, while US single-family building permits for new homes dipped to a nearly two and a half year low, suggesting that the US homebuilding market which had kept the US economy afloat alongside tech stocks during pandemic-led restrictions, might just be caught up in a recession.

In the matter of the fact, latest drop in US single-family building permits, the most-lucrative sector in US homebuilding market, came against the backdrop of a baleful increase in mortgage rates, as US mortgage buyer Freddie Mac had averaged a 6.35 per cent interest rate on a monthly basis over the most-popular 30-year fixed rate mortgages last week.

US housing starts fall, building permits drop to 2-1/2-year low

If truth is to be spoken, the US Federal Reserve’s ultra-hawkish monetary policy to tame a staggering inflation-surge appeared to have led to an increase in US mortgages to a multi-decade high, as first-time buyers remained at the bay.

According to data from Freddie Mac, US 30-year fixed rate home loans fell marginally to 6.15 per cent last week, while 15-year fixed rate mortgages stood at 5.28 per cent as of last week. Besides, according to data from the US Commerce Department, US single-family housing starts that accounted for the bulk of US homebuilding industry, rose 11.3 per cent last month, but overall housing starts fell by 1.4 per cent to an annualized rate of 1.382 million units.

Besides, US homebuilding tottered by 0.3 per cent last year, while US single-family building permits had declined to a rate of a 2-1/2-year low of 6.5 per cent to 730,000 units. Latest drop in single-family building permits had been the lowest since February 2016 excluding the pandemic-led downturn over the first half of 2020.