Housing & Construction January 2024

Builder Confidence Rises to 37
Builder Confidence rose 3 points to 37 in December after falling six points in November, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builders were cheered by falling mortgage rates and recent economic data. The increase came after four consecutive monthly declines. The HMI index measuring traffic of prospective buyers in December rose three points 24, the component measuring sales expectations in the next six months increased six points to 45 and the component charting current sales condition held steady at 40. Regional confidence numbers were mixed. Any number over 50 indicates that more builders view the component as good than view it as poor.
 
Building Permits Fall 2.5%
Overall building permits fell 2.5% in November to 1.46 million annual units after rising to 1.49 million units in October. Single-family permits rose 0.7% to 976,000 annual units after rising to 968,000 annual units in October and were down 8.4% year to date after being down 10.6% year to date in October. Multifamily permits dropped 8.5% to an annualized pace of 484,000 units after rising to 519,000 units in October. Permits were down year over year in all regions.
 
Housing Starts Jump 14.8%
Housing starts rose a robust 14.8% in November to a seasonally adjusted annual rate of 1.56 million units after rising to 1.37 million units in October. Single-family starts rose 18% to a seasonally adjusted annual rate of 1.14 million units after inching up to 970,000 units in October. Single family starts were down 7.2% year to date. There are currently 669,000 single-family homes under construction, down almost 15% from a year ago. In contrast, there are more than one million apartments under construction, near the highest total since 1973. Multifamily starts rose 6.3% to an annualized pace of 402,000 units after rising to 395,000 units in September.
 
New Home Sales Fall 12.2%
New home sales fell 12.2% in November to a seasonally adjusted annual rate of 590,000 homes after falling to 679,000 homes in October, according to the National Association of Home Builders (NAHB). Sales were up 3.9% from November 2022. Mortgage rates spiking at 7.8% mid-month depressed sales. New single-family home inventory in November jumped to the highest level since November 2022, rising 16.5% from October to 451,000, a 9.2 months’ supply at the current building pace. A 6 months’ supply is considered balanced. However, the market currently requires a higher level of new construction inventory due to a persistent lack of resale inventory. Newly built homes available for sale accounted for 31% of total homes available for sale in November, compared to an approximate 12% historical average. The median new home sale price in November was $434,700, up 4.8% from October, and down 5.9% compared to a year ago. Sales year to date were up in all regions. Sales of new homes are tabulated when contracts are signed and are considered a more timely barometer of the housing market than purchases of previously-owned homes, which are calculated when a contract closes.
 
Existing Home Sales Rise 0.8%
Existing home sales rose 0.8% in November to a seasonally adjusted annual rate of 3.82 million after falling to 3.79 million in October, according to the National Association of Realtors. Sales were down 7.3% from November 2022. The median existing-home sales price rose 4.0% year over year to $387,600, leaving year-over-year prices below $400,000 for the third consecutive month. The inventory of unsold existing homes fell 1.7% to 1.13 million at the end of November, a 3.5 months' supply at the current monthly sales pace. Realtors reported that homes stayed on the market approximately 25 days in November, down from 26 days in October. The current supply of existing homes for sale is roughly half what it was in 2019 before the pandemic. A chronic shortage of existing inventory is spurring new home construction and sales despite continuing high prices. Year-over-year prices were up in all regions.
 
Regional Housing Data

Mortgage Rates Fall to 6.6% 

• 30-year fixed-rate mortgages fell to 6.6% at the end of December after falling to 7.2% at the end of November. Mortgage rates were 6.4% at the end of December 2022.
• Even though rates fell by more than half a percent over the month, consumers are holding out, hoping rates will fall even more and more inventories will become available.

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