Amid news of Country Garden, China's top private developer, forecasting a default on $200 billion in international liabilities and $10 billion in dollar-denominated debt, we decided to glance at the U.S. housing market.
While we await September's housing starts data, August's figures highlighted increasing supply constraints. U.S. housing starts fell 11.3% month-over-month to an annualized rate of 1.283 million in August 2023, marking the lowest since June 2020 and notably below the projected 1.44 million. Single-family starts dropped 4.3% to 941K, and multi-unit starts fell 26.3% to 334K, with the West experiencing the sharpest decline at -28.9%.
The housing situation starkly reveals the limitations of interest rate policies. Tightening hasn't ameliorated supply issues. With the 30-year mortgage nearing 8%, mortgage demand is at its weakest since 1995. Despite high home prices making properties increasingly unaffordable for many, the supply of both new and existing homes remains constricted and getting worse.