Last week’s significant development was the sharp increase in mortgage rates, following three consecutive weeks of declines, prompted by Wednesday’s Federal Reserve announcement. While the widely anticipated quarter-point (25 basis points) reduction in the federal funds rate was expected, it was the bond market’s reaction to Fed Chair Powell’s announcement of two projected rate reductions in 2025, down from the four forecasted by the Central Bank in September, that drew attention. The National Association of Realtors reported This Week in Real Estate that existing home sales surged to an eight-month high in November, marking the second consecutive monthly increase and a 6.1% year-over-year rise – the largest annual increase since June 2021. Optimism is further reflected in the Conference Board’s Consumer Confidence Index, which rose in November for the second consecutive month to its highest level since July 2023. Builder sentiment remains steady as the year concludes, according to the latest NAHB Housing Market Index (HMI). Builders expressed increased optimism, with future sales expectations reaching a nearly three-year high. Despite concerns over higher interest rates, elevated construction costs, and a lack of buildable lots, builders anticipate future regulatory relief. Single-family housing starts increased by 6.4% month-over-month in November, and on a year-to-date basis, single-family construction is up 7.2%. While single-family permits remained flat in November, they have risen by 8.0% year-to-date. Below are key events from the third week of December impacting our business:
EXISTING-HOME SALES ELEVATED 4.8% IN NOVEMBER; POST STRONGEST YEAR-OVER-YEAR INCREASE SINCE JUNE 2021. Existing-home sales grew in November, according to the National Association of Realtors®. Total existing-home sales improved 4.8% from October to a seasonally adjusted annual rate of 4.15 million in November. Year-over-year, sales bounced 6.1% (up from 3.91 million in November 2023). Total housing inventory registered at the end of November was 1.33 million units, down 2.9% from October but up 17.7% from one year ago (1.13 million). Unsold inventory sits at a 3.8-month supply at the current sales pace, down from 4.2 months in October but up from 3.5 months in November 2023. The median existing-home price for all housing types in November was $406,100, up 4.7% from one year ago ($387,800). Single-family home sales progressed 5.0% to a seasonally adjusted annual rate of 3.76 million in November, up 7.4% from the previous year. The median existing single-family home price was $410,900 in November, up 4.8% from November 2023. “Home sales momentum is building,” said NAR Chief Economist Lawrence Yun. “More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6% and 7%.”
SINGLE-FAMILY STARTS POST SOLID GAIN. Overall housing starts decreased 1.8% in November to a seasonally adjusted annual rate of 1.29 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Within this overall number, single-family starts increased 6.4% to a 1.01 million seasonally adjusted annual rate. On a year-to-date basis, single-family construction is up 7.2%. While the pace of single-family starts increased in November, single-family permitting was flat. Overall permits increased 6.1% to a 1.51-million-unit annualized rate in November. Single-family permits increased 0.1% to a 972,000-unit rate and are up 8.0% on a year-to-date basis. The number of single-family units under construction is down 6.3% from a year ago, declining to 637,000 homes.
HOUSING MARKET DATA POSITIVE DESPITE POWELL’S GRINCH ACT. Federal Reserve Chairman Jerome Powell played the Grinch last week for the housing market, sending mortgage rates higher after his remarks at the Fed presser on Wednesday. Despite this, we had positive data on existing home sales, purchase applications, and our weekly pending contract figures. Total active listings are experiencing their traditional seasonal decline, but with less than two weeks left in the year, it’s evident that there are ready homebuyers in America. Purchase application data rose 1% weekly and is up 6% year over year, even with a higher bar to work from. The latest weekly pending contract data from Altos Research offers an exciting glimpse into the real-time dynamics of housing demand. Last week, there were 293,555 pending sales, representing a 9.9% increase from 267,033 in the same week of 2023 and an 11.2% increase from 263,937 in 2022. The available single-family inventory last week was 667,466, marking a 26.2% rise compared to the same week last year. However, there are 14.7% fewer single-family homes available compared to the same period in 2019, when the inventory stood at 782,856.
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