Housing & Construction December 2023

Builder Confidence Falls to 34
Builder Confidence fell six points in November to 34 after falling to 40 in October, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It was the fourth consecutive monthly decline in confidence. All three major HMI indices posted declines in November. The HMI index gauging current sales conditions fell six points to 40, sales expectations in the next six months dropped five points to 39 and traffic of prospective buyers fell five points to 21. NAHB attributed much of the decline to mortgage rates rising over 8% before falling back during the month and continued economic uncertainty. Any number over 50 indicates that more builders view the component as good than view it as poor.
 
Building Permits Rise 1.1%
Overall building permits increased 1.1% in October to a 1.49 million unit annual pace after falling to 1.47 million annual units in September. Single-family permits rose 0.5% to 968,000 annual units after rising to 965,000 annual units in September and were down 10.6% year to date. Multifamily permits rose 2.2% to an annualized pace of 519,000 units after falling to 508,000 units in September. Permits were down year over year in all regions.

Housing Starts Rise 1.9%
Housing starts rose 1.9% in October to a seasonally adjusted annual rate of 1.37 million units after rising to 1.36 million units in September. Single-family starts were essentially flat, rising 0.2% to a seasonally adjusted annual rate of 970,000 units after rising to 963,000 units in September. Single family starts were down 10.6% 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 5.6%
New home sales fell 5.6% in October to a seasonally adjusted annual rate of 679,000 homes after rising to a downwardly revised 719,000 homes in September, according to the National Association of Home Builders (NAHB). Sales were up 4.6% from October 2022. New single-family home inventory rose 8.3% to 439,000, the highest level of inventory since January and a 7.8 months’ supply at the current sales pace. A 6 months’ supply is considered balanced. Of total inventory, including new and existing homes, newly-built homes made up 30% of all single-family homes available for sale in October, compared to the 12% historical average. The median new home sale price in October was $409,300, down 3.1% from September, and down 17.6% compared to a year ago. Pricing is down due to both builder incentives and a shift towards building slightly smaller homes. In October, 33% of sales were priced between $300,000 and $400,000, compared to just 20% a year ago. Regional sales year to date were mixed. 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 Fall 4.1%
Existing home sales fell 4.1% in October to a seasonally adjusted annual rate of 3.79 million after falling to 3.96 million homes in September, according to the National Association of Realtors. Sales were down 14.6% from October 2022. The median existing-home sales price rose 3.4% year over year to $391,800, leaving year-over-year prices below $400,000 for the second consecutive month. The inventory of unsold existing homes grew 1.8% to 1.15 million at the end of October, a 3.6 months' supply at the current monthly sales pace. Realtors reported that homes stayed on the market approximately 26 days, up from 23 days in September. The current supply of existing homes for sale is roughly half what it was in 2019 before the pandemic. Year-over-year prices were up in all regions.
 
Regional Housing Data

Mortgage Rates Fall to 7.3% 

• 30-year fixed-rate mortgages fell to 7.3% at the end of November after rising to 7.9% at the end of October. Mortgage rates were 6.6% at the end of November 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 inventory will become available.

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