Housing & Construction January 2025

Builder Confidence Steady at 46
Builder Confidence held steady at 46 in December after rising three points in November, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Indexes were mixed. The HMI index gauging current sales conditions held steady at 48, the gauge charting traffic of prospective buyers fell one point to 31 and the component measuring sales expectations in the next six months rose three points to 66, the highest level since April 2022. Regional three-month moving averages were mixed. Any number over 50 indicates that more builders have a positive outlook than a negative one.
 
Building Permits Rise 6.1%
Building permits rose 6.1% to a 1.51 million unit annualized rate in November after falling to 1.42 million units in October. Single-family permits increased 0.1% to a 968,000 unit rate and are up 9.4% on a year-to-date basis. Multifamily permits increased 19.0% to an annualized 533,000 pace after falling to 448,000 units in October.
 
Housing Starts Fall 1.8%
Housing starts fell 1.8% in November to a seasonally adjusted annual rate of 1.29 million units after falling to 1.31 million units in October. Single-family starts rose 6.4% to 1.01 million annual units after falling in October. Single family starts were up 7.2% year to date. Multifamily starts fell 23.2% to an annualized pace of 278,000 and after rising to 341,000 starts in October. Regional housing starts were mixed.
 
New Home Sales Rise 5.9%
New home sales rose 5.9% in November to a seasonally adjusted annual rate of 664,000 new homes and November sales were revised to 627,000, according to the National Association of Home Builders. New home sales are up 8.7% from November 2023. The median sales price of new houses sold in November was $402,600. The average sales price was $484,800.The seasonally-adjusted estimate of new houses for sale at the end of November was 490,000, an 8.9 months’ supply at the current sales rate, down from a 9.5 months’ supply at the end of October. 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 4.8%
Existing-home sales rose 4.8% in November to a seasonally adjusted annual rate of 4.15 million new homes after rising to 3.96 million new homes in October. Sales were up 6.1% year over year after being up 2.9% in October. The median existing-home sales price rose year over year for the seventeenth consecutive month, rising 4.7% to $406,100. Inventory fell 2.9% to 1.33 million homes after rising to 1.37 million homes at the end of October. Inventory was at a 3.8 months’ supply at the current monthly sales paces, down from a 4.2 months’ supply in October. Existing home sales were up in most regions but were unchanged in the West. NAR says that home sales have been stuck around the 4 million mark for more than a year, despite more available inventory, low mortgage rates and continuing job growth.
 
Mortgage Rates Remain at 6.8%

• 30-year fixed-rate mortgages remained at 6.8% at the end of December after rising to 6.8% at the end of November. Mortgage rates were 6.6% at the end of December 2023.
  
• Mortgage rates have been volatile as continued economic strength nudges them higher and conflicting news about the economy and future plans has the opposite effect. 
  
• Economists expect rates to stabilize but remain near current levels as a chronic undersupply of homes keeps prices elevated.
  
• Mortgage rates fell to 3.0% in 2021 during the pandemic and crested at just over 8.0% in 2023.
  

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