Mitch Roschelle, founding partner of Macro Trends Advisors, has joined Varney & Co. This is to discuss the housing market under the Biden administration as monthly mortgage payments continue to rise.
Despite a sharp decline in mortgage rates, construction of new homes in the United States fell for the first time in four months in December.
Housing starts Sales fell 4.3% last month to 1.46 million units for the year, according to new Commerce Department data released Thursday. Refinitiv economists had expected a pace of 1.42 million units. The decline was due to a significant drop in single-family home construction, the largest decline since July 2022.
However, construction applications, which measure future construction, rose in December, increasing by 1.9% for the month at an annualized rate of 1.49 million units. Compared to the same period last year, the number of building permits has increased by approximately 6.1%.
“Building permits, a leading indicator of future construction, accelerated in December as builders expect the housing market to improve as borrowing costs fall,” said Jeffrey Roach, chief economist at LPL Financial. said.
Home foreclosures are increasing nationwide
Houses under construction in Sacramento, California on July 3, 2023. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
The data was released a day after the National Association of Home Builders/Wells Fargo Housing Market Index. Single-family housing marketfollowing a 3-point rise in December, rose 5 points to 44.
A reading below 50 is considered negative.
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“Lower interest rates have improved the housing affordability situation in the last month, leading to withdrawals in the fall due to higher borrowing costs,” said Alicia Huey, NAHB chair and custom home builder and developer in Birmingham, Alabama. “Some buyers have returned to the market.”
A sign outside a home for sale in Atlanta on September 6, 2023. (Ilya Nouberge/Bloomberg via Getty Images/Getty Images)
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Builder sentiment began a steady decline in late summer after mortgage rates soared above 7%, dampening demand from prospective homebuyers. However, many investors believe that borrowing costs have fallen over the past two months. federal reserve The aggressive campaign to raise interest rates has ended, and the bank will soon turn to rate cuts.
Interest rates on popular 30-year fixed mortgages are currently hovering around 6.66%, according to Freddie Mac, down from a high of 7.79% in late October but well above the pre-pandemic average of 3.9%. There is.
The recent drop in home prices has sparked optimism among home builders that the worst may be over. However, the housing market faces new headwinds heading into 2024, including rising prices and labor and lumber shortages.
