Homebuilder Confidence Rises Despite Lower Starts & Permits.
According to the U.S. Department of Housing and Urban Development, this week in real estate, single-family housing starts decreased 4.3% and single-family permits decreased 1.8% in January to seasonally adjusted annual rates of 841,000 and 718,000, respectively. There are currently 752,000 single-family homes under construction. This is 4.8% lower than a year ago. However, homebuilder confidence experienced the largest monthly increase in a decade in February, marking two consecutive solid monthly gains for builder sentiment to start 2023. Below are a few newsworthy events from the third week of February that influence our business:
Homebuilder Sentiment in February Improved by the Biggest Amount in a Decade.
Homebuilder confidence in the market for newly built single-family homes in February rose 7 points to 42, according to the National Association of Home Builders/Wells Fargo Housing Market Index. This is the highest reading since September and the largest monthly gain since June 2013. Builders say affordability is improving, as mortgage rates fall back from their highs of last fall and start to settle in a narrow range. “With the largest monthly increase for builder sentiment since June 2013, the HMI indicates that incremental gains for housing affordability have the ability to price-in buyers to the market,” said NAHB Chairman Alicia Huey. “The nation continues to face a sizeable housing shortage that can only be closed by building more affordable, attainable housing.” “Even as the Federal Reserve continues to tighten monetary policy conditions, forecasts indicate that the housing market has passed peak mortgage rates for this cycle,” said NAHB’s chief economist, Robert Dietz. “And while we expect ongoing volatility for mortgage rates and housing costs, the building market should be able to achieve stability in the coming months, followed by a rebound back to trend home construction levels later in 2023 and the beginning of 2024.” Full Story…
Stubbornly High Inflation Pushes Mortgage Rates Up.
Mortgage rates jumped this week, driven up by a record number of jobs and higher-than-expected inflation, says Nadia Evangelou, senior economist and director of real estate research for the National Association of REALTORS. The 30-year fixed-rate mortgage averaged 6.32%, up from 6.12% last week, according to Freddie Mac. While mortgage rates may see temporary increases in the coming weeks, they’re largely predicted to stabilize and remain below their most recent peak of 7.08%, which was set in mid-November 2022. “Mortgage rates could linger at around 6.5% for a few more months before heading below 6% by summer – and maybe even 5.5% by the end of the year,” says NAR Chief Economist Lawrence Yun. Once mortgage rates dip further, expect more home buyers to return to the housing market, Yun predicts. But he warns that with inventory levels still stubbornly low, an influx of buyers looking to take advantage of falling rates could set off “another revival of multiple bidding.” Full Story…
2023 Off to a Sluggish Start for Single-Family Production.
Overall housing starts decreased 4.5% to a seasonally adjusted annual rate of 1.31 million units in January, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The January reading of 1.31 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 4.3% to an 841,000 seasonally adjusted annual rate. On a year-over-year basis, single-family housing starts are down 27.3% compared to January 2022. As an indicator of the economic impact of housing, there are now 752,000 single-family homes under construction. This is 4.8% lower than a year ago. Single-family permits decreased 1.8% to a 718,000-unit rate and are down 40.0% compared to January 2022. Full Story…
Originally compiled & posted by Jason Waugh on the Berkshire Hathaway HomeServices Northwest Real Estate company blog.
