Today’s housing starts отчет из Бюро переписи населения показывает, что Федеральный резерв policy remains too restrictive for housing production to grow, which in the long run impacts the fight against inflation. This is why the data on single-family construction is not improving; in fact, it is getting worse.
The unfortunate part is that we don’t need ставки по ипотечным кредитам at 3%, 4% or 5% to gain some momentum: even rates around 6% could help initiate positive movement in the market. The main issue we’re facing is that Federal Reserve policy has a greater impact on the housing market than on any other sector. However, the Fed doesn’t shape its policies around the housing market — its focus is on labor and inflation. This is why we are currently struggling with the housing data.
Let’s take a look at all the builder data released this week.
Builder confidence is still near cycle low levels
This week, we received the Национальная ассоциация домостроителей данные о достоверности, which tends to focus on smaller homebuilders. Unfortunately, the results were not encouraging as we are currently at multi-year lows for all the components of the builder survey. Thankfully, the larger publicly traded homebuilders have enough profit margins to absorb the impact of rising mortgage rates. If it weren’t for them, housing starts, new home sales, and construction employment would be in even worse shape today.
Single-family housing data looks worse
Today’s Census housing data is disappointing, with all components appearing weak. Mortgage rates are nearing 7% or higher, which is detrimental for builders. Even though larger builders are making efforts to reduce rates, conditions are worsening because it is becoming increasingly costly to buy down rates and lower prices. This suggests that housing construction permit data has likely peaked for this decade unless mortgage rates decrease. Again, we don’t need to return to 3%-5% rates; even moving toward 6% could help builders.
Housing starts at early COVID-19 recession levels
With housing permits looking bleak, it’s not surprising that housing starts are now at levels we saw during the COVID-19 recession. While the data isn’t terrible — much like new home sales— we’re essentially at 2019 levels. This has been the frustrating aspect of the housing market; we are so close to having mortgage rates that could boost sales and construction data, but we just can’t seem to lower rates by that final 75 basis points to make it work.
Заключение
We entered the year with the expectation that the homebuilders would face a supply and demand problem. I know the builders’ confidence data was rising into the year, but many builders were hoping for lower rates in 2025. Near 7% and higher doesn’t really work for them, as their supply of completed units has grown to levels where housing permit data tends to fall. Therefore, I was working with a historical preference when saying they were going to have an issue in 2025.
New home sales are upcoming, and the chart below will be updated accordingly.
The good news is that when mortgage rates head down toward 6%, the builders’ stocks and confidence data do improve, so we aren’t far from some progress on what can move things again. However, until then, it won’t be lovely.
English