The Bureau of Labor Statistics’ December Consumer Price Index (CPI) report, released This Week in Real Estate, indicates that while inflation is not cooling dramatically, it is also not showing signs of reaccelerating. Core CPI increased by 0.2% after four consecutive months of 0.3% increases, resulting in an annual rate of 3.2%, slightly better than the forecasted 3.3%. The deceleration in core inflation, combined with comments from Federal Reserve Governor Chris Waller suggesting that “if inflation continues on this path through the beginning of 2025, it’s reasonable to think that possibly rate cuts could happen in the first half of the year,” led to a favorable response in the benchmark 10-year Treasury yield, causing mortgage rates to decline to their lowest levels in two weeks. Additionally, the Commerce Department reported that both single-family housing starts and permits in December reached their highest levels since February 2024. According to the National Association of Home Builders, builder confidence for newly constructed single-family homes increased by one point in January, compared to December. Fannie Mae’s latest Home Price Index (HPI) shows that year-over-year growth in single-family home prices accelerated in the fourth quarter, following two consecutive quarters of deceleration. Below are key events from the second week of January impacting our business: HOUSING STARTS END 2024 ON AN UP NOTE. Overall housing starts increased 15.8% in December to a seasonally adjusted annual rate of 1.50 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the highest rate since February 2024. Within this overall number, single-family starts increased 3.3% to a 1.05 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 61.5%for December to a 449,000 pace. Total housing starts for 2024 were 1.36 million, a 3.9% decline from the 1.42 million total from 2023. Single-family starts in 2024 totaled 1.01 million, up 6.5% from the previous year. NAHB is forecasting a slight gain for single-family home building in 2025 because of a persistent housing shortage and ongoing solid economic conditions. Multifamily starts ended the year down 25% from 2023. Single-family completions ended 2024 up 2.2%. Multifamily completions ended 2024 up 35%. Overall permits decreased 0.7% to a 1.48-million-unit annualized rate in December and were down 3.1% compared to December 2023. Single-family permits increased 1.6% to a 992,000-unit rate but were down 2.5% in December compared to the previous year. Total permits for 2024 were 1.47 million, a 2.6% decline from the 1.51 million total from 2023. Single-family permits in 2024 totaled 981,000 up 6.6% from the previous year, a positive sign for 2025. The number of single-family homes under construction was down 5.3% from a year ago, at 641,000 homes. Read the full story here.HOME PRICE GROWTH REACCELERATES IN FOURTH QUARTER. Single-family home prices increased 5.8 percent from Q4 2023 to Q4 2024, an acceleration from the previous quarter’s downwardly revised annual growth rate of 5.4 percent, according to the latest reading of the Fannie Mae Home Price Index (FNM-HPI). The FNM-HPI is a national, repeat-transaction home price index measuring the average, quarterly price change for all single-family properties in the United States, excluding condos. On a quarterly basis, home prices rose a seasonally adjusted 1.7 percent in Q4 2024, up from the downwardly revised 1.2 percent growth rate in Q3 2024. On a non-seasonally adjusted basis, home prices increased just 0.3 percent in Q4 2024. “Year-over-year home price growth accelerated in the fourth quarter, following back-to-back quarters of deceleration,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. “Inventories of existing homes for sale have improved from a year ago but remain historically low, due largely to the so-called ‘lock-in effect.’ Read the full story here.CORE CPI RISES LESS THAN FORECAST AS INFLATION PRESSURES EASE SLIGHTLY IN DECEMBER. New data from the Bureau of Labor Statistics out Wednesday showed that a key inflation metric eased for the first time since July. On a “core” basis, which strips out the more volatile costs of food and gas, the December Consumer Price Index (CPI) climbed 0.2% over the prior month, a deceleration from November’s 0.3% monthly gain. On an annual basis, prices rose 3.2%. Prior to December’s print, core CPI had been stuck at a 3.3% annual gain for the past four months. It was the first time since July that year-over-year core CPI saw a deceleration in price growth. Read the full story here.
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