Builders
started construction of privately-owned housing units in
January at a seasonally adjusted annual rate (SAAR) of 1,309,000 units (1.365
million expected).
This is 4.5% (±15.9%)* below the revised December estimate of 1,371,000
(originally 1.382 million units) and 21.4% (±10.6%) below the January SAAR rate
of 1,666,000 units; the not-seasonally adjusted YoY change (shown in the table
above) was -21.0%..
Single-family
housing starts in January were at a SAAR of 841,000; this is 4.3% (±16.4%)*
below the revised December figure of 879,000 units (-27.2% YoY). Multi-family:
468,000 units (-4.9% MoM; -8.1% YoY).
* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.
Total
completions were at a SAAR of 1,406,000. This is 1.0% (±9.8%)* above the
revised December estimate of 1,392,000 (originally 1.411 million units) and 12.8%
(±13.0%)* above the January 2022 SAAR of 1,247,000 units; the NSA comparison: +10.4%
YoY..
Single-family housing completions in January were at a SAAR of 1,040,000; this is 4.4% (±10.4%)* above the revised December rate of 996,000 units (+9.1% YoY). Multi-family: 366,000 units (-7.6% MoM; +14.4% YoY).
Total
permits were at a SAAR of 1,339,000 units (1.350 million expected). This is 0.1%
above the revised December rate of 1,337,000 (originally 1.330 million units)
but 27.3% below the January 2022 SAAR of 1,841,000 units; the NSA comparison: -23.8%
YoY.
Single-family authorizations were at a SAAR of 718,000; this is 1.8% below the revised December figure of 731,000 units (-36.8% YoY). Multi-family: 621,000 units (+2.5% MoM; -1.6% YoY).
Press
release from NAHB’s Robert
Dietz:
Two
consecutive solid monthly gains for builder confidence, spurred in part by
easing mortgage rates, signal that the housing market may be turning a corner
even as builders continue to contend with high construction costs and building
material supply chain logjams.
Builder
confidence in the market for newly built single-family homes in February rose
seven points to 42, according to the National Association of Home Builders
(NAHB)/Wells Fargo Housing Market Index (HMI). This is the strongest reading
since September of last year.
With
the largest monthly increase for builder sentiment since June 2013 (excluding
the period immediately after the onset of the pandemic), the HMI indicates that
incremental gains for housing affordability have the ability to price-in buyers
to the market. The nation continues to face a sizeable housing shortage that
can only be closed by building more affordable, attainable housing.
The
average 30-year fixed rate mortgage rate peaked at 7.08% in October, according
to Freddie Mac. Although rates declined to approximately 6.1% at the start of
February, the 10-year Treasury rate has moved up more than 30 basis points
during the past two weeks, indicating an increase for mortgage rates lies
ahead.
While
the HMI remains below the breakeven level of 50, the increase from 31 to 42
from December to February is a positive sign for the market. 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.
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.
While
builders continue to offer a variety of incentives to attract buyers during
this housing downturn, recent data indicate that the housing market is showing
signs of stabilizing off a cyclical low:
*
31% of builders reduced home prices in February, down from 35% in December and
36% in November.
*
The average price drop in February was 6%, down from 8% in December, and tied
with 6% in November.
*
57% offered some kind of incentive in February, down from 62% in December and
59% in November.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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