US housing starts sink

Photo: The Canadian Press

Construction continues on 1 Seaport, center, an apartment tower in New York's financial district. On Wednesday, Oct. 17, the Commerce Department reports on U.S. home construction in September.

U.S. home construction fell 5.3 per cent in September, a sign that rising mortgage rates may be weighing on the market.

The Commerce Department says that housing starts slipped last month to a seasonally adjusted annual rate of 1.2 million, down from 1.27 million in August. So far this year, starts have increased 6.4 per cent. But the pace of homebuilding has downshifted since May.

Homebuyers are facing new cost pressures that could be dampening demand.

Mortgage buyer Freddie Mac says that the average 30-year fixed-rate mortgage jumped to 4.9 per cent last week, the highest level since 2011. The combination of higher borrowing costs and rising home values has made home ownership less affordable.

Permits, an indicator of future activity, fell 0.6 per cent to an annual rate of 1.24 million.