Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Housing Starts Increased 14.8% in November
Posted Under: Government • Home Starts • Housing • Markets • Fed Reserve • Interest Rates
Supporting Image for Blog Post

 

Implications:  Housing starts surged well above expectations in November, rising 14.8% and crushing even the most optimistic forecast from any economics group.  While one month doesn’t make a trend, housing starts now sit at a six-month high, a sign that developers may have finally found their footing in what has been a challenging environment.  While 30-year mortgage rates remain above 7%, they have been on a downward trajectory since peaking above 8% at the end of October.  Given the new short-term interest rate projections the Federal Reserve released last week – where the median forecast was 75 bps of rate cuts in 2024 and not a single policymaker had short term interest rates higher a year from now than they are today – we expect mortgage rates to continue trending downward in 2024, providing a tailwind for sales activity.  Looking at the details of today’s report, gains were broad-based with all four major regions and both single-family and multi-unit starts contributing.  Housing permits declined 2.5% in November, but the drop was entirely due to permits for multi-units (-8.5%). Notably, permits for single-family homes have increased every month since the beginning of 2023.  In the past year, the number of single-family starts is up 42.2% while multi-unit starts are down 33.1%.  This huge gap in the data is due to the unprecedented nature of the last three years since COVID began.   Looking at the big picture, a combination of extremely low interest rates and pressure to work from home led to a big migration to the suburbs (and beyond) and high demand for single-family homes.  Then the economy reopened, causing many people to flock back to cities, sparking a boom in apartment projects.  Currently, the number of multi-unit properties under construction is hovering near record levels, going back to 1970, when records began. Now it looks like the move back to the cities has petered out leaving a glut of apartments.  Meanwhile, owners of existing homes are hesitant to list their properties and give up fixed sub-3% mortgage rates, so many prospective buyers have turned to new builds as their best option. While we don’t see housing as a major driver of economic growth in the near term, recent numbers are certainly not what you’d expect to see if there was a severe housing bust like the 2000s on the way, either.  In other recent housing news, the NAHB Housing Index, a measure of homebuilder sentiment, rose to 37 in December from 34 in November.  A reading below 50 signals that a greater number of builders view conditions as poor versus good.

Click here for a PDF version

Posted on Tuesday, December 19, 2023 @ 11:15 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.