Builders
started construction of privately-owned housing units in
November at a seasonally adjusted annual rate (SAAR) of 1,560,000 units (1.360
million expected).
This is 14.8% (±14.0%) above the revised October estimate of 1,359,000
(originally 1.372 million units) and 9.3% (±14.6%)* above the November 2022 SAAR
of 1,427,000 units; the not-seasonally adjusted YoY change (shown in the table
above) was +8.5%.
Single-family
housing starts in November were at a SAAR of 1,143,000; this is 18.0% (±12.9%)
above the revised October figure of 969,000 units (+43.7% YoY). Multi-family: 417,000
units (+6.9% MoM; -32.8% YoY).
* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.
Total
completions were at a SAAR of 1,447,000. This is 5.0% (±15.1%)* above the
revised October estimate of 1,378,000 (originally 1.410 million units) but 6.2%
(±15.2%)* below the November 2022 SAAR of 1,543,000 units; the NSA comparison: -6.1%
YoY.
Single-family housing completions were at a SAAR of 960,000; this is 3.2% (±13.2%)* below the revised October rate of 992,000 units (-14.0% YoY). Multi-family: 487,000 units (+26.2% MoM; +15.4% YoY).
Total
permits were at a SAAR of 1,460,000 units (1.470 million expected). This is 2.5%
below the revised October rate of 1,498,000 (originally 1.463 million units)
but 4.1% above the November 2022 SAAR of 1,402,000 units; the NSA comparison: +2.3%
YoY.
Single-family authorizations were at a SAAR of 976,000; this is 0.7% above the revised October figure of 969,000 units (+23.2% YoY). Multi-family: 484,000 units (-8.5% MoM; -21.8% YoY).
Press
release from NAHB’s Robert Dietz:
“Falling
mortgage rates helped end a four-month decline in builder confidence, and
recent economic data signal improving housing conditions heading into 2024.
“Builder
confidence in the market for newly built single-family homes rose three points
to 37 in December, according to the National Association of Home Builders
(NAHB)/Wells Fargo Housing Market Index (HMI). With mortgage rates down roughly
50 basis points over the past month, builders are reporting an uptick in
traffic. The housing market appears to have passed peak mortgage rates for this
cycle, and this should help to spur home buyer demand in the coming months,
with the HMI component measuring future sales expectations up six points in
December.
“It
is worth noting that single-family builder sentiment has separated somewhat
from recent starts/permits data. Our statistical analysis indicates that
temporary and outsized differences between builder sentiment and starts occur
after short-term interest rates rise dramatically, increasing the cost of land
development and builder loans used by private builders. In turn, higher
financing costs for home builders and land developers add another headwind for
housing supply in a market low on resale inventory. While the Federal Reserve
is fighting inflation, state and local policymakers could also help by reducing
the regulatory burdens on the cost of land development and home building,
thereby allowing more attainable housing supply to the market. Looking forward,
as rates moderate, this temporary difference between sentiment and construction
activity will decline.
“But
with mortgage rates still running above 7% throughout November, per Freddie Mac
data, many builders continue to reduce home prices to boost sales. In December,
36% of builders reported cutting home prices, tying the previous month’s high
point for 2023. The average price reduction in December remained at 6%,
unchanged from the previous month. Meanwhile, 60% of builders provided sales
incentives of all forms in December, the same as November but down slightly
from 62% in 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.
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