Overall housing starts increased 14.8% in November to a seasonally adjusted annual rate of 1.56 million units, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
Single-family starts increased 18% to a 1.14 million seasonally adjusted annual rate; year-to-date, single-family starts are down 7.2%.
The National Association of Home Builders cited lower interest rates and a lack of resale inventory as the factors boosting the November home construction.
“The single-family starts figure is remarkably strong, and we would not be surprised to see this figure revised lower or fall back slightly in the next month, given the nearly 20% rise in November,” stated NAHB Chief Economist Robert Dietz. “NAHB is forecasting an approximate 4% gain for single-family starts in 2024, as mortgage rates settle lower, economic growth slows and inflation moves lower.”
The falling mortgage rates were also cited as a reason builder confidence increased in December for the first time in four months—builder confidence rose three points to 37 according to the NAHB/Wells Fargo Housing Market Index (HMI). (Any number over 50 indicates that more builders view conditions as good than poor.)
“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,” stated Dietz.
With mortgage rates running above 7% throughout November, many builders continue to reduce home prices to boost sales, the NAHB reported. In December, 36% of builders reported cutting home prices.
