Housing Starts Fell Again. That's Good News for Sellers
Housing Starts Fell Again. That's Good News for Sellers
Builders just pulled back for the third month in a row. The Census Bureau says housing starts fell 5.2% in September to a seasonally adjusted annual rate of 1.221 million homes, down 7.4% from a year ago. Single-family starts dropped 4.6% to 859,000, the lowest in a year. Economists had expected 1.30 million, so this came in well under the forecast. On the surface that sounds like bad news for housing. For you, selling your own home, it is mostly good news. With one catch you need to see coming.
Here is the good part first. Every home a builder does not start today is a home that will not be competing with yours next spring. Building permits, the forward gauge, barely moved at 1.40 million, and single-family permits fell 4% to 845,000, a three-and-a-half-year low. They are lining up fewer projects ahead. I wrote last week about builder confidence hitting a 14-year low, and this is that gloom turning into action. Fewer starts now means a thinner field of shiny new competition when your listing is live.
Now the catch: the houses already built are still coming
Do not mistake a slowdown in starts for a shortage of competition today. Completions, the homes actually finished and hitting the market, ran at a 1.192 million annual rate in September, up 2.2% from August. Those houses were started months ago. They are framed, roofed, and listed right now, and their builders need them gone.
That is why 43% of builders reported cutting prices in October, the largest share of the decade, at an average reduction of about 6%. A builder with finished inventory and a construction loan cannot wait. You can, but only if you price like you know what they are doing. Go look at what the new builds in your area are actually listed at this week, not what they were asking in the summer. Your ceiling is their discounted price, not their original one.
What I would do if I were listing this week
First, sell the thing builders cannot: a home that is ready now, in an established street, without a construction zone next door and without a six-month wait. New builds come with timelines and upgrade menus. Yours has a front door you can walk through today. Say so in the listing.
Second, price against the builder's price cut, not their list price. If the new estate down the road just dropped 6%, your buyer already knows it. A resale priced above a discounted new build has to justify itself, and "I paid more in 2022" is not a justification. Run your numbers on our mortgage calculator and check your ask against our pricing breakdown before you go live, not after a month of silence.
Third, use your commission money the way builders use buydowns. They are spending real money to buy buyers' rates down because the monthly payment is what sells the house at 7.32%. You kept roughly 6% that a listed seller hands to agents. A few thousand of it toward a buydown or closing credit, out of money you never paid away, beats a price cut and still leaves you ahead of the neighbour with the agent sign out front.
One honest note. The Census Bureau cautions that a single month of starts data is noisy, and a trend takes about six months to confirm. But three straight declines, permits at a multi-year low, and builders cutting prices at the same time is a pattern, not a blip.
The bottom line: fewer starts today means less new competition tomorrow, and that helps every existing-home seller. But the competition already built is discounting right now, so your price has to meet this week's market, not next year's. Price sharp, sell the ready-now advantage, and put a little of your saved commission to work on the buyer's payment. That is how you win that gap.
Sources: Builder Magazine on the Census Bureau and HUD September starts report; TradingView on the third straight monthly decline in starts; SourceFirst News on September starts and October builder price cuts. Photo: Pexels.