Housing starts in December came in at a seasonally adjusted annual rate of 1.46 million, above consensus expectations of 1.43 million. Single-family housing starts (1.03 million) were 16% higher than a year ago, and permits for single-family homes reached their highest level since May 2022.
Homebuilders are expressing greater optimism for two reasons: the anticipation of lower mortgage rates throughout 2024 and a persistent gap between housing starts and demand, ensuring tight market conditions, explained CoreLogic chief economist Selma Hepp.
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Despite the drop in mortgage rates, many builders continue to reduce home prices to stimulate sales. In January, about 31% of builders reported price cuts, a decrease from the 36% in previous months and the lowest since August, with an average reduction of 6%. Additionally, 62% of builders have been offering various sales incentives since October.
January’s HMI indices all registered improvements: current sales conditions rose by seven points to 48, sales expectations over the next six months surged by 12 points to 57, and the metric for prospective buyer traffic increased by five points to 29.
Source: mpamag.com