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Report from
North America
US housing starts down and building permits hit 42-
month low
US single-family homebuilding fell sharply in September
and permits for future construction tumbled to a three and
a half year low as higher mortgage rates suppressed
demand, suggesting residential investment returned to its
declining trend in the third quarter.
Overall housing starts decreased 5.2% to a pace of 1.221
million units, the US Department of Commerce reported, a
level 7.4% lower than last September. Single-family
housing starts, which account for the bulk of
homebuilding, dropped 4.6% from the previous month but
were 2.6% higher than last September. Homebuilding fell
over the month in the South, Midwest and West regions
but increased in the Northeast.
The report from the Commerce Department followed on
the heels of a National Association of Home Builders
survey showing sentiment among single-family
homebuilders plunged in October to the lowest level since
June 2012.
Mortgage rates have surged in recent weeks, with the 30-
year fixed rate averaging 7.40% in mid-October, the
highest level in nearly three years. Slumping sales have
led to a glut of unsold houses on the market, further
reducing the incentive for developers to break ground on
new single-family housing projects. Despite the overhang
of new single-family homes, there is a national housing
shortage, which is keeping home prices elevated.
"The weakness in housing starts is not surprising. Even if
homebuilders were putting up new houses, who could
afford to buy them?" said Christopher Rupkey, chief
economist at FWDBONDS.
In Canada, housing starts picked up last month though the
pace remains soft as the broader market shows signs of
cooling into the end of the year.
Housing starts across Canada came in at a seasonally
adjusted annualized rate in September of 248,896 units, a
2.8% rise from the month before, Canada Mortgage and
Housing Corp. (CMHC) said.
Monthly housing starts were down 11% year-over-year in
centers with a population of 10,000 or more, with 19,984
units recorded in September. That took the year-to-date
total of actual starts in these areas to 170,964, down
roughly 4% from the same period in 2025.
“A key risk for Canada now is not building enough during
this period of softening housing markets across the
country,” said Aled ab Iorwerth, deputy chief economist at
CMHC.
US home sales show surprising rise in September
US existing home sales unexpectedly increased in
September but the trend stayed subdued against the
backdrop of rising mortgage rates and still higher prices,
which have made the dream of owning a house
unattainable for many young Americans.
The rise in sales reported by the National Association of
Realtors mostly reflected a downward revision to August's
sales pace. Housing supply increased to pre-COVID-19
pandemic levels, highlighting weak demand.
"The unexpected increase in existing home sales likely
reflected delayed closings and improved inventory," said
Priscilla Thiagamoorthy, a senior economist at BMO
Capital Markets. "But, with 30-year mortgage rates
nearing 7.5%, prices still climbing and affordability
deteriorating, the housing market is likely to remain
subdued for some time."
Home sales advanced 1.5% last month to a seasonally
adjusted annual rate of 3.99 million units. August's sales
were revised down to show a 3.2% drop instead of the
previously reported 2.0%.
Sales fell 2.2% on a year-over-year basis in September.
"This low sales activity that we are experiencing is clearly
due to the lack of demand, not due to limited supply," said
Lawrence Yun, the NAR's chief economist. "Higher
mortgage rates are the big reason for that." Regionally,
sales in the Northeast declined 2.1% month-over-month to
an annual rate of 470,000.
Sales were down 4.1% from September 2025. In the
Midwest, sales were unchanged month on month at an
annual rate of 930,000 down 2.1% year on year. Sales
increased in the South by 2.8% month-over-month to an
annual rate of 1.86 million. Sales in the South were down
0.5% from September 2025.
In the West, sales increased 2.8% month-over-month to an
annual rate of 730,000, which was 5.2% down from a year
ago.
See: https://www.nar.realtor/newsroom/existing-home-sales-
increased-1-5-in-september-according-to-nar-report
September jobs report shows slowdown in hiring
The US Department of Labour reported that employers
added 29,000 jobs in September, a month when Federal
Reserve officials viewed the labor market as stable even as
economists said it remained challenging for unemployed
workers to break in.
Payroll gains for past months were revised down,
reflecting fewer summer hires than previously reported.
The department now estimates US employers added
133,000 jobs in August, some 29,000 fewer than reported
last month. The estimate for July was revised to show a
loss of 10,000 jobs in July.
Employment in both construction and manufacturing
ticked up slightly in September. Employment in
construction gained 11,000 positions. The industry has
added an average of 10,000 jobs per month over the prior
12 months. Manufacturing employment gained 9,000 jobs
and is up by 72,000 since a
recent low in December 2025.
"Even after payrolls’ disappointment, job growth’s pace in
the last three months is around the top of economists’
estimates of the rate needed to hold the unemployment rate
steady," said Bill Adams, Fifth Third Commercial Bank's
chief US economist. "But slowing wage growth even as
inflation accelerates is a sign that workers are having a
hard time moving up to better paying jobs, even if outright
unemployment is low."
See: https://www.bls.gov/news.release/empsit.nr0.htm
US consumer sentiment dips further
The mood of US consumers has darkened in October,
according to the University of Michigan’s monthly survey.
The survey’s headline index fell to 46.3 in its preliminary
October reading, versus 48.1 in September. The drop
returns sentiment closer to its record-low reading of 44.8,
set in May. Inflation, geopolitical uncertainty and a stable
but staid job market have been weighing on consumer
spirits over the past 18 months.
“Frustration over cost-of-living continues to mount, as
consumers across the political spectrum believe that the
trajectory of the economy has weakened since the
beginning of the year,” said Joanne Hsu, the survey’s
director.
Shoppers’ feelings about the economy have been battered
by high prices and persistent inflation. The latest
frustration: soaring fuel costs, lifted by fallout from the
war with Iran. But consumers’ actual spending has
remained buoyant, supported by wealth gains from a
roaring stock market and by a stable employment
backdrop.
Wage growth has cooled but unemployment remained at a
relatively modest 4.2% in September and layoffs have
been scant.
See: https://www.sca.isr.umich.edu/
and
https://www.msn.com/en-us/news/other/consumer-sentiment-
drops-per-michigan-survey/ar-AA2dTtvI?ocid=BingNewsVerp
GDP revised upward to 2.2% for Q2
Second quarter gross domestic product (GDP) for the US
increased at an annual rate of 2.2%, an upward revision of
0.7% as the Bureau of Economic Analysis released its
third and final estimate. The change primarily reflects
upward revisions to investment, consumer spending and
government spending.
Economists expect the third quarter GDP report to reflect
even stronger growth. Output is projected to increase at an
annualized 3.2% rate in Q3, based on the median estimate
for a set of projections compiled by the Capital Spectator.
Recent US economic growth appears to have been fueled
by a powerful combination of resilient consumer spending
and a surge in business investment.
Households continue to spend at a healthy pace, while
companies are ramping up capital expenditures,
particularly in AI-related infrastructure such as data
centers and semiconductor projects.
See: https://www.bea.gov/news/2026/gdp-third-estimate-
industries-corporate-profits-state-gdp-and-state-personal-income-
2nd
Construction material prices see large year on year
increase
Construction input prices increased 2.2% in September
compared to the previous month, according to an
Associated Builders and Contractors analysis of US
Bureau of Labor Statistics’ Producer Price Index data.
Nonresidential construction input prices increased 2.3%
for the month.
Both overall and nonresidential construction input prices
rose 11.2% between September 2025 and September 2026.
Crude petroleum and unprocessed energy materials prices
increased 28.3% and 22.2%, respectively, while natural
gas prices increased 5.1% for the month
“Construction input prices have risen more than 11% over
the past 12 months, the largest year-over-year increase in
nearly four years,” said ABC Chief Economist Anirban
Basu. “While higher fuel prices brought about by the
conflict in Iran have driven a substantial portion of the
increase, prices for tariffed materials like iron, copper and
other metal products continue to rise rapidly.
“In light of this precipitous and ongoing increase in
materials prices, it is unsurprising that more than 1 in 4
ABC contractors expect their profit margins to contract
over the next six months, according to ABC’s
Construction Confidence Index.”
See:
https://www.woodworkingnetwork.com/news/woodworking-
industry-news/construction-materials-prices-increased-112-year-
over-year-september
US manufacturing growth stays steady
Economic activity in the manufacturing sector expanded in
September for the ninth consecutive month, say the
nation’s supply executives in the latest ISM
Manufacturing PMI Report. “The Manufacturing PMI
registered 54.5% in September, 0.1 percentage point
below the August figure of 54.6%. A reading above 50%
signifies growth.
The manufacturing sector showed several signs of robust
factory activity in September. New orders grew for a ninth
straight month, the Backlog of Orders Index rose 4.6
percentage points to 56.4 and the Employment Index
gained 1.5 points to 52.7, suggesting continued growth in
manufacturing payrolls.
Of the 18 manufacturing industries surveyed by ISM, 12
reported growth in September and two reported
contraction. The Furniture & Related Products industry
reported growth for the month while the Wood Products
industry reported neither growth or loss for the month.
See: https://www.ismworld.org/supply-management-news-and-
reports/reports/ism-pmi-reports/pmi/september/
US sets tariff total for Canadian sawn softwood
sawnwood exports at almost 35%
The US Department of Commerce has set the
countervailing duty rate at 14.11% and the anti-dumping
rate at 10.64%, for a combined rate of 24.75%. With the
additional 10% tariff imposed under Section 232,
Canadian softwood sawnwood faces import taxes of
34.75% when entering the United States.
The British Columbia Sawnwood Trade Council (BCLTC)
said it is "disappointed" that Canadian sawnwood
producers face "unjustified and punitive" trade measures.
The seventh annual review of Canadian softwood
sawnwood imports into the United States, which covers
sawnwood imported in calendar year 2024, was met
favorably by the U.S. sawnwood industry.
"We applaud the Commerce Department's continued
commitment to enforcing the US trade laws against
subsidized and unfairly traded Canadian sawnwood
imports," stated Zoltan van Heyningen, Executive Director
of the US Sawnwood Coalition.
See: https://bclumbertrade.com/archivenewsroom/statement-by-
the-bc-lumber-trade-council-on-the-outcome-of-u-s-department-
of-commerces-seventh-administrative-review/
and
https://www.woodworkingnetwork.com/news/woodworking-
industry-news/us-sets-tax-total-canadian-softwood-lumber-
exports-almost-35-percent
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