Still, a housing recovery could take time-and is in part dependent on the course of monetary policy. “Mortgage rates have come down since peaking in mid-November, so home sales may be close to reaching the bottom in the current housing cycle,” Yun said during an existing-home sales data release last month, as Barron’s previously reported. Last month, National Association of Realtors chief economist Lawrence Yun said existing-home sales may be reaching their low point. “Mortgage rates are down from above 7% in recent weeks to about 6.3% today, and for the first time since April, builders registered an increase in future sales expectations.”Īs higher rates have slowed the housing market, Dietz isn’t the only industry economist saying a bottom may be near. Robert Dietz, the trade group’s chief economist, said the narrowing of the confidence index’s drop was a “silver lining.” The decline this month “is the smallest drop in the index in the past six months, indicating that we are possibly nearing the bottom of the cycle for builder sentiment,” Dietz said in a statement. The trade group said on Monday that its measure of single-family home builder confidence fell in December for the 12th consecutive month.īut it isn’t all bad news. The average interest rate on a 30-year fixed-rate mortgage last week was 6.31%, according to Freddie Mac-down from recent highs but still more than double 2021’s final reading of 3.11%.īuilder confidence has also continued to fall, according to the National Association of Home Builders. As mortgage rates have risen, single-family home construction has slowed. The drop in single-family construction is part of a larger pullback linked to home affordability. Single-family permits fell 7.1%, extending a month-over-month slump that began in March. The seasonally adjusted rate of building permits was 1.34 million, representing a drop of 11.2% from October’s revised figure of 1.51 million and below a FactSet consensus estimate that called for 1.48 million. Total building permits, a forward-looking indicator of future construction, came in lower than consensus expectations.
Construction on homes with one unit was 4.1% lower than in October, representing the third consecutive month-over-month drop. Single-family starts slid more than the total figure.
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