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US single-family homebuilding rebounded in September, boosted by demand for new construction amid an acute housing shortage, but the highest mortgage rates in nearly 23 years could slow momentum and delay the overall housing market recovery.

That was flagged by other data on Wednesday showing applications for loans to purchase a home plunged last week to levels last seen in 1995. In addition, the jump in housing starts partially recouped the decline in August.

The rebound in homebuilding probably reflected permits approved several months ago before mortgage rates broke above 7%. A survey this week showed confidence among single-family homebuilders slumped to a nine-month low in October, with builders reporting lower levels of traffic.

“In the very short-term, single-family construction activity is likely to increase with permits rising in every month of 2023 thus far, but at some point mortgage rates are likely to put a lid on new construction activity for home purchase,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.

Single-family housing starts, which account for the bulk of homebuilding, increased 3.2% to a seasonally adjusted annual rate of 963,000 units last month, the Commerce Department said. Data for August was revised to show starts dropping to a rate of 933,000 units instead of 941,000 units as previously reported.

Single-family starts rose in the Midwest, West and the densely populated South, but plunged 19.0% in the Northeast.

The housing market had shown signs of stabilizing before mortgage rates resumed their upward trend late in the summer, with the rate on the popular 30-year fixed mortgage vaulting above 7% in August. According to the Mortgage Bankers Association, the average contract interest rate on a 30-year fixed-rate mortgage rose 3 basis points to 7.70% last week, the highest since November 2000.

Mortgage rates have risen in tandem with the yield on the benchmark 10-year Treasury note, which has spiked to more than a 16-year high, mostly because of expectations that the Federal Reserve will keep interest rates higher for longer in response to the economy’s resilience. Since March 2022, the central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.

Residential investment has contracted for nine straight quarters, the longest such stretch since the housing market bubble burst, triggering the 2008 global financial crisis and the Great Recession. That downturn probably extended into the third quarter, though overall gross domestic product growth last quarter was likely the fastest since late 2021, thanks to a tight labor market that is underpinning consumer spending.

Stocks on Wall Street were trading lower amid mounting tensions in the Middle East. The dollar rose against a basket of currencies. U.S Treasury prices fell, with the yield on the 10-year bond rising to the highest level since July 2007.

Financial markets expect the Fed will leave rates unchanged at its Oct. 31-Nov. 1 policy meeting, according to CME Group’s FedWatch Tool, given the surge in Treasury yields.

Starts for housing projects with five units or more soared 17.1% to a rate of 383,000 units in September. Overall housing starts accelerated 7.0% to a rate of 1.358 million units in September. Economists polled by Reuters had forecast starts rebounding to a rate of 1.380 million units.

Permits for future construction of single-family homes rose 1.8% to a rate of 965,000 units, the highest since May 2022. Though permits are a leading indicator, economists cautioned against being too optimistic about homebuilding prospects, citing the soaring mortgage rates and souring builder sentiment.

“It’s not lights out for homebuilding, but we don’t know how many more body blows with the Fed’s interest-rate hammer the nation’s housing sector can withstand,” said Christopher Rupkey, chief economist at FWDBONDS in New York.

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Thames Water rescue plan promises £20.5bn investment

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Thames Water rescue plan promises £20.5bn investment

The group of Thames Water lenders aiming to rescue the company have set out plans for £20.5bn of investment to bolster performance.

The proposals, submitted to the regulator for consideration, include commitments to spending £9.4bn on sewage and water assets over the next five years, up 45% on current levels, to prevent spills and leaks respectively.

Of this, £3.9bn would go towards the worst performing sewage treatment sites following a series of fines against Thames Water, and other major operators, over substandard storm overflow systems.

It said this would be achieved at the 2025-30 bill levels already in place, so no further increases would be needed, but it continued to argue that leniency over poor performance will be needed to effect the turnaround.

The creditors have named their consortium London & Valley Water.

It effectively already owns Thames Water under the terms of a financial restructuring agreed early in the summer but Ofwat is yet to give its verdict on whether the consortium can run the company, averting the prospect of it being placed in a special administration regime.

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Is Thames Water a step closer to nationalisation?

Thames is on the brink of nationalisation because of the scale of its financial troubles, with debts above £17bn.

Without a deal the consortium, which includes investment heavyweights Elliott Management and BlackRock, would be wiped out.

Ofwat, which is to be scrapped under a shake-up of oversight, is looking at the operational plan separately to its proposed capital structure.

The latter is expected to be revealed later this month.

Sky News revealed on Monday that the consortium was to offer an additional £1bn-plus sweetener in a bid to persuade Ofwat and the government to back the rescue.

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Thames Water handed record fine

Mike McTighe, the chairman designate of London & Valley Water, said: “Over the next 10 years the investment we will channel into Thames Water’s network will make it one of the biggest infrastructure projects in the country.

“Our core focus will be on improving performance for customers, maintaining the highest standards of drinking water, reducing pollution and overcoming the many other challenges Thames Water faces.

“This turnaround has the opportunity to transform essential services for 16 million customers, clean up our waterways and rebuild public trust.”

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The government has clearly signalled its preference that a market-based solution is secured for Thames Water, though it has lined up a restructuring firm to advise on planning in the event the proposed rescue deal fails.

A major challenge for the consortium is convincing officials that it has the experience and people behind it to meet the demands of running a water company of Thames Water’s size, serving about a quarter of the country’s population.

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Brianna Ghey’s mother calls for school smartphone ban

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Brianna Ghey's mother calls for school smartphone ban

The mother of murdered teenager Brianna Ghey is calling on the government to introduce a ban on mobile phones in schools – a move she says will not only safeguard children, but also improve their behaviour and engagement in class.

In February 2023, Brianna, 16, was stabbed to death by two 15-year-olds after being lured to a park in Warrington.

In the lead-up to the attack, her killers had spent time on the dark web. At the same time, Brianna was also trapped online, struggling with a phone addiction.

Her mother Esther Ghey’s Phone Free Education campaign is driven by her personal experiences as a parent and the impact Brianna’s phone use had on her education.

Brianna Ghey struggled with a mobile phone addiction, according to her mother
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Brianna Ghey struggled with a mobile phone addiction, according to her mother

“All the arguments that me and Brianna had were down to her phone use,” Esther said.

“But even in school, she had issues and I used to have phone calls from the school saying that Brianna wouldn’t put her phone away.”

Brianna, who was transgender, struggled with an eating disorder and also self-harmed.

Her mother says the constant time she spent online exacerbated those issues, while impacting her behaviour at school, where she had 120 safeguarding logs and 116 behaviour incidents recorded by her teachers.

Esther Ghey said she had calls from her daughter's school saying that 'Brianna wouldn't put her phone away'
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Esther Ghey said she had calls from her daughter’s school saying that ‘Brianna wouldn’t put her phone away’

“It was so difficult as a parent, because I felt in one way that I was failing and then in another way, and this is really difficult for me to speak about, I was so annoyed with Brianna,” she recalled.

“I thought, why can’t you just go to school, get your head down and just focus on your education, because this is important.

“Only now, after two years of being immersed in this world, do I realise that actually, it’s so much harder than that.”

Research by the Children’s Commission has shown that 79% of secondary schools are still allowing pupils to bring their mobile phones into school, and even into classrooms.

Brianna's school introduced a ban on mobile phones in September last year
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Brianna’s school introduced a ban on mobile phones in September last year

How phone ban is working at Brianna’s old school

Esther is campaigning for government guidance on phones to become statutory, with funding also set aside for the equipment to help schools implement the ban, arguing the lack of legislation is “setting children up to fail”.

At Birchwood Community High School in Warrington, where Brianna was a pupil, they introduced a ban on phones last September.

At the beginning of the day, pupils turn off their phones and place them in pouches, which are locked. At the end of the school day, the pouches are then unlocked.

Pupils at Birchwood Community High School in Warrington place their phones in pouches, which are then locked
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Pupils at Birchwood Community High School in Warrington place their phones in pouches, which are then locked

The headteacher, Emma Mills, said introducing these measures has come with several benefits.

“It’s had an impact in all areas of school, and it’s actually had a really positive impact in ways that I didn’t foresee,” said Ms Mills.

“Attendance has improved this year. In terms of behaviour, behaviour has improved. We’ve had no permanent exclusions this year in school, which is actually the first time since I’ve been headteacher in six years, there’s been no permanent exclusion.”

This summer, the school also saw its best-ever GCSE results in the core subjects of Science, maths, and English.

Emma Mills, headteacher at Birchwood Community High School in Warrington
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Emma Mills, headteacher at Birchwood Community High School in Warrington

‘They can live without their phones’

For Ms Mills, another significant change has been the atmosphere in the school.

“They’re not as worried, they’re not as distracted,” Ms Mills said.

“They’ve realised that they can live without their phones. Something else we’ve really noticed is that it’s a bit louder in school at breaks and lunch times. It’s because they’re talking more, they’re interacting more, and they’re communicating more.”

The positive impact of a ban at Brianna’s old school has served as encouragement to Esther, who has written an open letter addressed to Sir Keir Starmer and Education Secretary Bridget Phillipson, asking for government support.

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Brianna Ghey
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Brianna Ghey

High-profile signatories include the actress Kate Winslet, as well as actor and film producer Stephen Graham.

For Esther, who will deliver the letter to 10 Downing Street next month, the campaign is not just Brianna’s legacy, but also creating societal change.

“I think it’s important that we teach young people to live in the real world,” she said.

“It’s going to impact society at one point and I think this small amount of investment in students now will have a massive impact in the future.”

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UK

Revealed: Huge rise in protests being dealt with by police

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Revealed: Huge rise in protests being dealt with by police

Police across the UK dealt with more than 3,000 protests over three months this summer – more than three times as many as just two years ago.

There were 3,081 protests this June, July, and August across England, Wales, Scotland and Northern Ireland, figures from the National Police Chiefs’ Council have revealed.

Last summer, when riots were raging across the country following the Southport murders, police dealt with 2,942 protests. In 2023, it was 928.

The summer months this year have been dominated by widespread demonstrations, some against the ban on Palestine Action and others against housing asylum seekers in hotels.

Counter-protesters with police as people take part in a Stand Up To Racism rally in Orpington in August. Pic: PA
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Counter-protesters with police as people take part in a Stand Up To Racism rally in Orpington in August. Pic: PA

‘Increasing tension’

Gavin Stephens, chairman of the NPCC, said it was clear that there has been “more community tension and more division”, adding that “we all have a responsibility, policing included, to set the tone”.

“Anybody in a leadership position should think about how we can reduce and defuse tensions and not sow division,” Mr Stephens said.

The senior official said protests this year were a “chronic pressure” for police compared to last year’s disorder, which was acute.

“This is not talking about the volume of protest, and this is not a commentary from policing on people’s right to protest peacefully,” he said.

“We absolutely support that in a democracy, but we do know that there is a climate of increasing tension and polarity in what we’re seeing.”

He is convinced communities will be able to reunite and “reset”, and said claims that the UK is on the verge of civil disobedience are “exaggerated”.

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It comes as policing leaders are pushing for a major restructuring of forces in England and Wales, hoping to bring more powers to a national level.

They also want to overhaul how funding is calculated for each force.

A government white paper on potential changes to the service is expected to be published in the coming months.

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