March 2024 Residential Sales, Inventory and Prices

Click image for larger view

Click image for larger view

Sales of new single-family houses in March 2024 were at a seasonally adjusted annual rate (SAAR) of 693,000 units (670,000 expected). This is 8.8% (±17.2%)* above the revised February rate of 637,000 (originally 662,000 units) and 8.3% (±19.5%)* above the March 2023 SAAR of 640,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +8.1%. For longer-term perspectives, NSA sales were 50.1% below the “housing bubble” peak but 28.2% above the pre-2000 average.

The median sales price of new houses sold in March was $430,700 (+6.0% MoM, or $24,200). The average sales price was $524,800 (+7.4%, or $36,200). Homes priced at/above $750,000 comprised 13.4% of sales, up from the year-earlier 11.3%.

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

Click image for larger view

As mentioned in our post about housing permits, starts and completions in March, single-unit completions fell by 111,000 units (-10.5%). Sales rose (56,000 units, or +8.8%), but inventory for sale expanded in absolute terms (+12,000 units) while shrinking in months-of-inventory terms (0.5 month). 

Click image for larger view

Existing home sales sank (190,000 units or -4.3%) in March to a SAAR of 4.19 million units (4.18 million expected). The inventory of existing homes for sale expanded in both absolute (+50,000 units) and months-of-inventory (+0.3 month) terms. Because new sales advanced while resales retreated, the share of total sales comprised of new homes increased to 14.2%. The median price of previously owned homes sold in March jumped to $393,500 (+2.5% or $9.700).

Click image for larger view

Housing affordability dropped by 2.7 percentage points as the median price of existing homes for sale in February climbed $5,800 (+1.5% MoM; +5.6% YoY) to $383,500. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices rose by a not-seasonally adjusted monthly change of +0.6% (+6.4% YoY).

“Following last year’s decline, U.S. home prices are at or near all-time highs,” said Brian Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. “Our National Composite rose by 6.4% in February, the fastest annual rate since November 2022. Our 10- and 20-City Composite indices are currently at all-time highs. For the third consecutive month, all cities reported increases in annual prices, with four currently at all-time highs: San Diego, Los Angeles, Washington, D.C., and New York. On a seasonally adjusted basis, our National, 10- and 20- City Composite indices continue to break through previous all-time highs set last year.”

“Since the previous peak in prices in 2022, this marks the second time home prices have pushed higher in the face of economic uncertainty. The first decline followed the start of the Federal Reserve’s hiking cycle. The second decline followed the peak in average mortgage rates last October. Enthusiasm for potential Fed cuts and lower mortgage rates appears to have supported buyer behavior, driving the 10- and 20- City Composites to new highs.”

“The Northeast region, which includes Boston, New York, and Washington, D.C., ranks as the best performing market for over the last half year. As remote work benefited smaller (and sunnier markets) in the first part of the decade, return to office may be contributing to outperformance in larger metropolitan markets in the Northeast,” according to Luke.

“San Diego has been the best performing market following the trough in home prices observed in early 2023. With Los Angeles rising for 13 consecutive months to record another new high, Southern California has outperformed its surrounding neighbors. San Francisco has dropped 12% since its peak, while Phoenix and Las Vegas have dropped 6% and 4.5%, respectively.”

“With all markets increasing on an annual basis, similar performance was observed in the monthly return data. Eighteen markets experienced uplift in February. Tampa experienced a decline of 0.3% while Seattle has the largest monthly gain of 2.3%.”

Click image for larger view

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.

March 2024 Residential Permits, Starts and Completions

Click image for larger view

Click image for larger view

Builders started construction of privately-owned housing units March at a seasonally adjusted annual rate (SAAR) of 1,321,000 units (1.480 million expected). This is 14.7% (±9.9%) below the revised February estimate of 1,549,000 (originally 1.521 million units) and 4.3% (±9.4%)* below the March 2023 SAAR of 1,380,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -2.7%.

Single-family housing starts in March were at a SAAR of 1,022,000; this is 12.4% (±12.5%)* below the revised February figure of 1,167,000 units (+22.0% YoY). Multi-family: 299,000 units (-21.7% MoM; -44.1% YoY).

* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.

Click image for larger view

Click image for larger view

Total completions were at a SAAR of 1,469,000. This is 13.5% (±11.0%) below the revised February estimate of 1,698,000 (originally 1.729 million units) and 3.9% (±13.5%)* below the March 2023 SAAR of 1,528,000 units; the NSA comparison: -4.0% YoY.

Single-family completions were at a SAAR of 947,000; this is 10.5% (±10.1%) below the revised February rate of 1,058,000 units (-8.6% YoY). Multi-family: 522,000 units (-18.4% MoM; +6.4% YoY).

Click image for larger view

Click image for larger view

Total permits were at a SAAR of 1,458,000 units (1.510 million expected). This is 4.3% below the revised February rate of 1,523,000 (originally 1.518 million units) but 1.5% above the March 2023 SAAR of 1,437,000 units; the NSA comparison: -5.9% YoY.

Single-family permits were at a SAAR of 973,000; this is 5.7% below the revised February figure of 1,032,000 units (+6.2% YoY). Multi-family: 485,000 units (-1.2% MoM; -24.5% YoY).

Click image for larger view

Click image for larger view

Press release from NAHB’s Robert Dietz:

“Builder sentiment was flat in April as mortgage rates remained close to 7% over the past month and the latest inflation data failed to show improvement during the first quarter of 2024.

“Builder confidence in the market for newly built single-family homes was 51 in April, unchanged from March, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This breaks a four-month period of gains for the index, which nonetheless remains above the key breakeven point of 50.

“April’s flat reading suggests potential for demand growth is there, but buyers are hesitating until they can better gauge where interest rates are headed. With the markets now adjusting to rates being somewhat higher due to recent inflation readings, we still anticipate the Federal Reserve will announce future rate cuts later this year, and that mortgage rates will moderate in the second half of 2024.

“The April HMI survey also revealed that 22% of builders cut home prices this month, down from 24% in March and 36% in December 2023. However, the average price reduction in April held steady at 6% for the 10th straight month. Meanwhile, the use of sales incentives ticked down to 57% in April from a reading of 60% in March.”

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.

February 2024 Residential Sales, Inventory and Prices

Click image for larger view

Click image for larger view

Sales of new single-family houses in February 2024 were at a seasonally adjusted annual rate (SAAR) of 662,000 units (675,000 expected). This is 0.3% (±16.2%)* below the revised January rate of 664,000 (originally 661,000 units), but 5.9% (±14.3%)* above the February 2023 SAAR of 625,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +7.1%. For longer-term perspectives, NSA sales were 52.3% below the “housing bubble” peak and 14.8% above the long-term, pre-2000 average.

The median sales price of new houses sold in February 2024 was $400,500 (-3.5% MoM, or $14,400). The average sales price was $485,000 (-7.3%, or $38,400). Homes priced at/above $750,000 comprised 11.7% of sales, little changed from the year-earlier 11.9%.

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

Click image for larger view

As mentioned in our post about housing permits, starts and completions in February, single-unit completions jumped by 180,000 units (+20.2%). Sales ticked lower (2,000 units, or -0.3%), so inventory for sale expanded in both absolute (+6,000 units) and months-of-inventory (8.3 months) terms. 

Click image for larger view

Existing home sales surged (380,000 units or +9.5%) in February to a SAAR of 4.38 million units (3.92 million expected). The inventory of existing homes for sale expanded in absolute terms (+60,000 units) but shrank in months-of-inventory terms (-0.1 month). Because new sales retreated while resales advanced, the share of total sales comprised of new homes decreased to 13.1%. The median price of previously owned homes sold in February rose to $384,500 (+1.6% or $5,900).

Click image for larger view

Housing affordability rose 3.3 percentage points as the median price of existing homes for sale in January retreated by $2,300 (-0.6% MoM; +5.0% YoY) to $383,500. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices slipped by a not-seasonally adjusted monthly change of -0.1% (but +6.0% YoY).

“U.S. home prices continued their drive higher,” said Brian Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. “Our National Composite rose by 6% in January, the fastest annual rate since 2022. Stronger gains came from our 10- and 20-City Composite indices, rising 7.4% and 6.6%, respectively. For the second consecutive month, all cities reported increases in annual prices, with San Diego surging 11.2%. On a seasonally adjusted basis, home prices have continued to break through previous all-time highs set last year.”

“We’ve commented on how consistently each market performed during 2023 and that continues to be the case. While there is a large disparity between leaders such as San Diego versus laggards such as with Portland, the broad market performance is tightly bunched up. This is also true of high and low tiers. The average annual gains between high and low tiers across cities tracked by the indices is just 1.1%. Low price tiered indices have outperformed high priced indices for 17 months. Homeowners most likely saw healthy gains in the last year, no matter what city you were in, or if it was in an expensive or inexpensive neighborhood. No matter which way you slice it, the index performance closely resembled the broad market.”

“On a monthly basis, home prices continue to struggle in the face of elevated borrowing costs. Seventeen markets dropped over the last month, while Minneapolis has posted a 2.4% decline over the prior three months. Only Southern California and Washington D.C. have stood up to the rising wave of interest rates and delivered positive returns to start the year. San Diego rose 1.8% in January, followed by DC with 0.5% and Los Angeles at 0.1%.”

Click image for larger view

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.

February 2024 Residential Permits, Starts and Completions

Click image for larger view

Click image for larger view

Builders started construction of privately-owned housing units in February at a seasonally adjusted annual rate (SAAR) of 1,521,000 units (1.449 million expected). This is 10.7% (±14.2%)* above the revised January estimate of 1,374,000 (originally 1.331 million units) and 5.9% (±10.0%)* above the February 2023 SAAR of 1,436,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +4.7%.

Single-family housing starts in February were at a SAAR of 1,129,000; this is 11.6% (±14.8%)* above the revised January figure of 1,012,000 units (+34.5% YoY). Multi-family: 392,000 units (+8.3% MoM; -34.8% YoY).

* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.

Click image for larger view

Click image for larger view

Total completions were at a SAAR of 1,729,000. This is 19.7% (±18.5%) above the revised January estimate of 1,445,000 (originally 1.416 million units) and 9.6% (±15.6%)* above the February 2023 SAAR of 1,577,000 units; the NSA comparison: +11.1% YoY.

Single-family were at a SAAR of 1,072,000; this is 20.2% (±17.7%) above the revised January rate of 892,000 units (+5.3% YoY). Multi-family: 657,000 units (+18.8% MoM; +23.9% YoY).

Click image for larger view

Click image for larger view

Total permits were at a SAAR of 1,518,000 units (1.500 million expected). This is 1.9% above the revised January rate of 1,489,000 (originally 1.470 million units) and 2.4% above the February 2023 rate of 1,482,000 units; the NSA comparison: +6.7 YoY.

Single-family permits were at a SAAR of 1,031,000; this is 1.0% above the revised January figure of 1,021,000 units (+35.1% YoY). Multi-family: 487,000 units (+4.1% MoM; -25.3% YoY).

Click image for larger view

Click image for larger view

Press release from NAHB’s Robert Dietz:

“A lack of existing inventory that continues to drive buyers to new home construction, coupled with strong demand and mortgage rates below last fall’s cycle peak, helped push builder sentiment above a key marker in March.

“Builder confidence in the market for newly built single-family homes climbed three points to 51 in March, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the highest level since July 2023 and marks the fourth consecutive monthly gain for the index. It is also the first time that the sentiment level has surpassed the breakeven point of 50 since last July.

“Buyer demand remains brisk and we expect more consumers to jump off the sidelines and into the marketplace if mortgage rates continue to fall later this year, particularly as the Fed is expected to enact rate cuts during the second half of 2024. However, builders continue to face several supply-side challenges, including a scarcity of buildable lots and skilled labor, and new restrictive codes that continue to increase the cost of building homes. Building materials will also face upward pressure on prices as home building activity expands.

“With mortgage rates below 7% since mid-December per Freddie Mac, more builders are cutting back on reducing home prices to boost sales. In March, 24% of builders reported cutting home prices, down from 36% in December 2023 and the lowest share since July 2023. However, the average price reduction in March held steady at 6% for the ninth straight month. Meanwhile, the use of sales incentives is holding firm. The share of builders offering some form of incentive in March was 60%, and this has remained between 58% and 62% since last September.”

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.

January 2024 Residential Sales, Inventory and Prices

 

Click image for larger view

Click image for larger view

Sales of new single-family houses in January 2024 were at a seasonally adjusted annual rate (SAAR) of 661,000 units (685,000 expected). This is 1.5% (±19.9%)* above the revised December rate of 651,000 (originally 664,000 units) and 1.8% (±19.4%)* above the January 2023 SAAR of 649,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +3.6%. For longer-term perspectives, NSA sales were 52.4% below the “housing bubble” peak and 9.0% above the long-term, pre-2000 average.

The median sales price of new houses sold in January 2024 was $420,700 (+1.8% MoM, or $7,600). The average sales price was $534,300 (+8.3%, or $40,900). Homes priced at/above $750,000 comprised 14.0% of sales, up from the year-earlier 12.7%.

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

Click image for larger view

As mentioned in our post about housing permits, starts and completions in January, single-unit completions fell by 167,000 units (-16.3%). Sales advanced (10,000 units, or +1.5%), but inventory for sale expanded in absolute terms (+4,000 units) but remained constant in months-of-inventory terms. 

Click image for larger view

Existing home sales rose (120,000 units or +3.1%) in January to a SAAR of 4.00 million units (3.97 million expected). The inventory of existing homes for sale expanded in absolute terms (+20,000 units) but shrank in months-of-inventory terms (-0.1 month). Because new sales advanced at a slower pace than resales, the share of total sales comprised of new homes decreased to 14.2%. The median price of previously owned homes sold in January dipped to $379,100 (-0.6% or $2,300).

Click image for larger view

Housing affordability jumped 7.7 percentage points as the median price of existing homes for sale in December retreated by $5,200 (-1.3% MoM; +4.0% YoY) to $387,000. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices fell to a not-seasonally adjusted monthly change of -0.4% (but +5.5% YoY).

“U.S. home prices faced significant headwinds in the fourth quarter of 2023,” said Brian Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. “However, on a seasonally adjusted basis, the S&P Case-Shiller Home Price Indices continued its streak of seven consecutive record highs in 2023. Ten of 20 markets beat prior records, with San Diego registering an 8.9% gain and Las Vegas the fastest rising market in December, after accounting for seasonal impacts.”

“2023 U.S. housing gains haven’t followed such a synchronous pattern since the COVID housing boom. The term ‘a rising tide lifts all boats’ seems appropriate given broad-based performance in the U.S. housing sector. All 20 markets reported yearly gains for the first time this year, with four markets rising over 8%. Portland eked out a positive annual gain after 11 months of declines. Regionally, the Midwest and Northeast both experienced the greatest annual appreciation with 6.7%.”

“Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years. With trend growth at the national level of 4.7%, a 5.5% return demonstrates solid, steady growth. While we are not experiencing the double-digit gains seen in the previous two years, above-trend growth should be well received considering the rising costs of financing home mortgages. We previously suggested that the surge in home prices during the COVID pandemic could have accelerated home ownership temporarily. The past two years reflect consistent growth slightly above trend, suggesting a more secular shift in home ownership post pandemic. In the short term, meanwhile, we should be able to measure the impact of higher mortgage rates on home prices. Increased financing costs appeared to precipitate home price declines in the fourth quarter, as 15 markets saw lower values compared to September.”

Click image for larger view

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.

January 2024 Residential Permits, Starts and Completions

Click image for larger view

Click image for larger view

Builders started construction of privately-owned housing units in January at a seasonally adjusted annual rate (SAAR) of 1,331,000 units (1.470 million expected). This is 14.8% (±10.2%) below the revised December estimate of 1,562,000 (originally 1.460 million units) and 0.7% (±11.7%)* below the January 2023 SAAR of 1,340,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -4.1%.

Single-family housing starts in January were at a SAAR of 1,004,000; this is 4.7% (±11.6%)* below the revised December figure of 1,054,000 units (+18.7% YoY). Multi-family: 327,000 units (-35.6% MoM; -37.2% YoY).

* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.

Click image for larger view

Click image for larger view

Total completions were at a SAAR of 1,416,000 units. This is 8.1% (±10.0%)* below the revised December estimate of 1,541,000 (originally 1.574 million units), but 2.8% (±14.6%)* above the January 2023 SAAR of 1,377,000 units; the NSA comparison: +1.6% YoY.

Single-family completions were at a SAAR of 857,000; this is 16.3% (±7.9%) below the revised December rate of 1,024,000 units (-17.0% YoY). Multi-family: 559,000 units (+8.1% MoM; +57.1% YoY).

Click image for larger view

Click image for larger view

Total permits were at a SAAR of 1,470,000 units (1.510 million expected). This is 1.5% below the revised December rate of 1,493,000 (originally 1.495 million units) but 8.6% above the January 2023 SAAR of 1,354,000 units; the NSA comparison: +11.6 YoY.

Single-family permits were at a rate of 1,015,000; this is 1.6% above the revised December figure of 999,000 units (+42.0% YoY). Multi-family: 455,000 units (-7.9% MoM; -22.1% YoY).

Click image for larger view

Click image for larger view

Press release from NAHB’s Robert Dietz:

“Expectations that mortgage rates will continue to moderate in the coming months, the prospect of future rate cuts by the Federal Reserve later this year, and a protracted lack of existing inventory helped provide a boost to builder sentiment for the third straight month.

“Builder confidence in the market for newly built single-family homes climbed four points to 48 in February, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the highest level since August 2023.

“Buyer traffic improved at the start of 2024, as even small declines in interest rates produce a disproportionate positive response among likely home purchasers. And while mortgage rates still remain too high for many prospective buyers, we anticipate that due to pent-up demand, many more buyers will enter the marketplace if mortgage rates continue to decline this year.

“With expectations of Fed rate cuts in the latter half of 2024, NAHB is forecasting that single-family starts will rise about 5% this year. But as builders break ground on more homes, lot availability is expected to be a growing concern, along with persistent labor shortages. And as a further reminder that the recovery will be bumpy as buyers remain sensitive to interest rate and construction cost changes, the 10-year Treasury rate is up more than 40 basis points since the beginning of the year.

“With mortgage rates now below 7% since mid-December, more builders are cutting back on reducing home prices to boost sales. In February, 25% of builders reported cutting home prices, down from 31% in January and 36% in the last two months of 2023. However, the average price reduction in February held steady at 6% for the eighth straight month. Meanwhile, the use of sales incentives is also diminishing. The share of builders offering some form of incentive dropped to 58% in February, down from 62% in January and the lowest share since last August.”

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.

December 2023 Residential Sales, Inventory and Prices

Click image for larger view

Click image for larger view

Sales of new single-family houses in December 2023 were at a seasonally adjusted annual rate (SAAR) of 664,000 units (650,000 expected). This is 8.0% (±24.2%)* above the revised November rate of 615,000 (originally 590,000 units) and 4.4% (±20.6%)* above the December 2022 SAAR of 636,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +6.4%. For longer-term perspectives, NSA sales were 52.2% below the “housing bubble” peak and 4.4% below the long-term, pre-2000 average.

An estimated 668,000 new homes were sold in 2023. This is 4.2% (±5.2%)* above the 2022 figure of 641,000.

The median sales price of new houses sold in December 2023 was $413,200 (-3.0% MoM, or $12,800). The average sales price was $487,300 (+0.4%, or $1,800). Homes priced at/above $750,000 comprised 8.0% of sales, down from the year-earlier 17.0%.

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

Click image for larger view

As mentioned in our post about housing permits, starts and completions in December, single-unit completions rose by 82,000 units (+8.4%). Sales advanced by a smaller amount (49,000 units, or +8.0%), resulting in inventory for sale expanding in absolute terms (+4,000 units) but shrinking in months-of-inventory terms (-0.6 month). 

Click image for larger view

Existing home sales retreated (40,000 units or -1.0%) in December to a SAAR of 3.78 million units (3.80 million expected). The inventory of existing homes for sale contracted in both absolute (-130,000 units) and months-of-inventory (-0.3 month) terms. Because new sales advanced while resales fell, the share of total sales comprised of new homes increased to 14.9%. The median price of previously owned homes sold in December dipped to $382,600 (-1.3% or $5,100).

Click image for larger view

Housing affordability rose 2.8 percentage points as the median price of existing homes for sale in November retreated by $3,900 (-1.0% MoM; +3.5% YoY) to $392,100. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices fell to a not-seasonally adjusted monthly change of -0.2% (but +5.1% YoY).

“U.S. home prices edged downward from their all-time high in November,” says Brian Luke, Head of Commodities, Real & Digital Assets at S&P DJI. “The streak of nine monthly gains ended in November, setting the index back to levels last seen over the summer months. Seattle and San Francisco reported the largest monthly declines, falling 1.4% and 1.3%, respectively.”

“November’s year-over-year gain saw the largest growth in U.S. home prices in 2023, with our National Composite rising 5.1% and the 10-city index rising 6.2%. Detroit held its position as the best performing market for the third month in a row, accelerating to an 8.2% gain. San Diego notched an 8% annual gain, retaining its second spot in the nation. Barring a late surge from another market, those cities will vie for the ‘housing market of the year’ as the best performing city in our composite.”   

“Six cities registered a new all-time high in November (Miami, Tampa, Atlanta, Charlotte, New York, and Cleveland). Portland remains the lone market in annual decline. The Northeast and Midwest recorded the largest gains with returns of 6.4% and 6.3%, respectively. Other regions are not far behind with the slowest gains in the West of 3%. This month’s report revealed the narrowest spread of performance across the nation since the first quarter of 2021.”

“The tight disparity speaks to a rising tide across the country, with less evidence of micro-markets bucking the trend. The days of markets in the South rising double digits with markets in the Midwest remaining flat are over. The house price decline came at a time where mortgage rates peaked, with the average Freddie Mac 30-year fixed rate mortgage nearing 8%, according to Federal Reserve data. The rate has since fallen over 1%, which could support further annual gains in home prices.”

Click image for larger view

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.

December 2023 Residential Permits, Starts and Completions

Click image for larger view

Click image for larger view

Builders started construction of privately-owned housing units in December at a seasonally adjusted annual rate (SAAR) of 1,460,000 units (1.425 million expected). This is 4.3% (±12.5%)* below the revised November estimate of 1,525,000 (originally 1.560 million units), but 7.6% (±17.6%)* above the December 2022 SAAR of 1,357,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +6.9%.

Single-family starts in December were at a rate of 1,027,000; this is 8.6% (±11.2%)* below the revised November figure of 1,124,000 units (+14.4% YoY). Multi-family: 433,000 units (+8.0% MoM; -6.8% YoY).

An estimated 1,413,100 housing units were started in 2023. This is 9.0% (±2.5%) below the 2022 figure of 1,552,600.

* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.

Click image for larger view

Click image for larger view

Total completions were at a SAAR of 1,574,000. This is 8.7% (±19.9%)* above the revised November estimate of 1,448,000 (originally 1.447 million units) and 13.2% (±17.7%)* above the December 2022 SAAR of 1,390,000 units; the NSA comparison: +15.0% YoY.

Single-family completions were at a SAAR of 1,056,000; this is 8.4% (±18.5%)* above the revised November rate of 974,000 units (+8.3% YoY). Multi-family: 518,000 units (+9.3% MoM; +33.5% YoY).

An estimated 1,452,500 housing units were completed in 2023. This is 4.5% (±3.8%) above the 2022 figure of 1,390,500.

Click image for larger view

Click image for larger view

Total permits were at a SAAR of 1,495,000 units (1.478 million expected). This is 1.9% above the revised November rate of 1,467,000 (originally 1.460 million units) and 6.1% above the December 2022 SAAR of 1,409,000 units; the NSA comparison: -2.2% YoY.

Single-family authorizations in December were at a rate of 994,000; this is 1.7% above the revised November figure of 977,000 units (+26.9% YoY). Multi-family: 501,000 units (+2.2% MoM; -28.3% YoY).

An estimated 1,469,800 housing units were authorized by building permits in 2023. This is 11.7% below the 2022 figure of 1,665,100.

Click image for larger view

Click image for larger view

Press release from NAHB’s Robert Dietz:

“Mortgage rates well under 7% over the past month have led to a sharp increase in builder confidence to begin the new year.

“Builder confidence in the market for newly built single-family homes climbed seven points to 44 in January, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This second consecutive monthly increase in builder confidence closely tracks with a period of falling interest rates.

“Mortgage rates have decreased by more than 110 basis points since late October per Freddie Mac, lifting the future sales expectation component in the HMI into positive territory for the first time since August. Lower interest has improved housing affordability and brought some buyers back into the market. However, as home building expands in 2024, the market will see growing supply-side challenges in the form of higher prices and/or shortages of lumber, lots and labor.

“Even as mortgage rates have fallen below 7% over the past month, many builders continue to reduce home prices to boost sales. In January, 31% of builders reported cutting home prices, down from 36% during the previous two months and the lowest rate since last August. The average price reduction in January remained at 6%, unchanged from the previous month. Meanwhile, 62% of builders provided sales incentives of all forms in January. This share has remained stable between 60% and 62% since October.”

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.