REUTERS
"US pending home sales fall in January as high mortgage rates deter buyers"
By Amina Niasse
February 29, 2024
NEW YORK, Feb 29 (Reuters) - Pending U.S. home sales retreated in January, a report on Thursday showed, as buyers continue to struggle with still-high mortgage rates.
The National Association of Realtors Pending Home Sales index fell 4.9% to 74.3.
A poll by Reuters showed economists expected a 1.0% increase.
The increase in pending sales in December was revised sharply lower to 5.7% from 8.3%, even as the index value for that month was revised higher, reflecting NAR revisions for 2023.
“The job market is solid, and the country’s total wealth reached a record high due to stock market and home price gains,” said Lawrence Yun, chief economist at the NAR.
“This combination of economic conditions is favorable for home buying."
"However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales.”
On a year-over-year basis, pending home sales fell 8.8% in January.
In late 2023, contracts signed tumbled as higher mortgage rates limited prospective buyer traffic and discouraged homeowners from selling.
The average rate on the 30-year fixed-rate mortgage has eased from two-decade highs near 8% in October, remaining below 7% since early December, according to Freddie Mac, after the Federal Reserve left its policy benchmark rate unchanged since July.
On a monthly basis, the Midwest and South experienced the largest decline in pending sales in January, by a respective 7.6% and 7.3%.
On a year-over-year basis, all regions posted a decrease in pending home sales.
Reporting by Amina Niasse; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-p ... 024-02-29/
THE HOUSING MARKET
Re: THE HOUSING MARKET
REUTERS
"US Treasury eases rules on unspent COVID aid to boost affordable housing"
By David Lawder
March 5, 2024
WASHINGTON, March 5 (Reuters) - The U.S. Treasury Department on Tuesday announced new steps to boost the supply of affordable housing by unlocking billions of dollars in unspent COVID-19 aid funding to state and local governments to support a wider array of housing projects.
The initiatives are part of a Biden administration drive to address a key economic challenge facing Americans: lack of housing affordability.
This is in turn contributing to inflation and negative voter sentiment on President Joe Biden's handling of the economy.
In the biggest of the moves, the Treasury said it would allow state and local governments to use unspent funds from the $350 billion State and Local Fiscal Recovery Fund to support housing projects serving families earning up to 120% of the area's median income, a big jump from 65% previously.
These funds can also now be spent on projects that meet the terms of one of a dozen or more federal housing programs as well as those supported by government mortgage enterprises Fannie Mae and Freddie Mac to house essential workers such as teachers, firefighters and nurses.
This will open up a significantly wider array of housing projects eligible for support.
SPENDING DEADLINES LOOM
The amount of funding still available for such projects could be as high as about $40 billion, based on Reuters calculations.
As of Sept. 30, 2023, Treasury estimated that about 12% of the $350 billion in state and local funding had not been budgeted by states and the largest cities and counties, which received the lion's share of the funding.
The 2021 American Rescue Plan Act stipulated that all of the state and local fiscal recovery funds must be obligated -- with contracts or other binding spending commitments -- by the end of 2024, and funds must be fully expended by the end of 2026.
Anything left over then reverts to the federal government for Congress to redeploy.
Another step announced by Treasury will allow communities with unspent COVID-era Emergency Rental Assistance Program funds can divert them to supporting "pre-development" and land acquisition costs for low-income affordable housing projects, in addition to construction and rehabilitation costs allowed previously.
As of June 30, 2023, the most recent data available, about $6.9 billion was left in the original $46 billion rental assistance program started by the Trump administration and expanded under Biden to combat homelessness during the pandemic.
Home prices are set to rise further in coming years as homeowners with low mortgage rates stay put, according to property experts.
Increasing housing supply has proven difficult amid high interest rates and recent materials shortages.
"The lack of supply is helping to drive up housing costs for American families," Deputy Treasury Secretary Wally Adeyemo said in a blog post, adding that the steps would have a "modest but important impact on housing supply."
HUD BACKSTOP EXTENDED
The Treasury also said it was indefinitely extending the Federal Financing Bank's support for a housing project risk-sharing initiative between the Department of Housing and Urban Development (HUD) and local housing agencies.
The program was restarted in 2021, leveraging $5 billion in investments to develop and rehabilitate 42,000 affordable rental homes for low-income families, and Adeyemo estimated that the extension will add tens of thousands more units over the next decade.
The Federal Financing Bank provides financing for federal agency borrowing and lending programs.
Reporting by David Lawder; Editing by Andrea Ricci and Chizu Nomiyama
https://www.reuters.com/markets/us/us-t ... 024-03-05/
"US Treasury eases rules on unspent COVID aid to boost affordable housing"
By David Lawder
March 5, 2024
WASHINGTON, March 5 (Reuters) - The U.S. Treasury Department on Tuesday announced new steps to boost the supply of affordable housing by unlocking billions of dollars in unspent COVID-19 aid funding to state and local governments to support a wider array of housing projects.
The initiatives are part of a Biden administration drive to address a key economic challenge facing Americans: lack of housing affordability.
This is in turn contributing to inflation and negative voter sentiment on President Joe Biden's handling of the economy.
In the biggest of the moves, the Treasury said it would allow state and local governments to use unspent funds from the $350 billion State and Local Fiscal Recovery Fund to support housing projects serving families earning up to 120% of the area's median income, a big jump from 65% previously.
These funds can also now be spent on projects that meet the terms of one of a dozen or more federal housing programs as well as those supported by government mortgage enterprises Fannie Mae and Freddie Mac to house essential workers such as teachers, firefighters and nurses.
This will open up a significantly wider array of housing projects eligible for support.
SPENDING DEADLINES LOOM
The amount of funding still available for such projects could be as high as about $40 billion, based on Reuters calculations.
As of Sept. 30, 2023, Treasury estimated that about 12% of the $350 billion in state and local funding had not been budgeted by states and the largest cities and counties, which received the lion's share of the funding.
The 2021 American Rescue Plan Act stipulated that all of the state and local fiscal recovery funds must be obligated -- with contracts or other binding spending commitments -- by the end of 2024, and funds must be fully expended by the end of 2026.
Anything left over then reverts to the federal government for Congress to redeploy.
Another step announced by Treasury will allow communities with unspent COVID-era Emergency Rental Assistance Program funds can divert them to supporting "pre-development" and land acquisition costs for low-income affordable housing projects, in addition to construction and rehabilitation costs allowed previously.
As of June 30, 2023, the most recent data available, about $6.9 billion was left in the original $46 billion rental assistance program started by the Trump administration and expanded under Biden to combat homelessness during the pandemic.
Home prices are set to rise further in coming years as homeowners with low mortgage rates stay put, according to property experts.
Increasing housing supply has proven difficult amid high interest rates and recent materials shortages.
"The lack of supply is helping to drive up housing costs for American families," Deputy Treasury Secretary Wally Adeyemo said in a blog post, adding that the steps would have a "modest but important impact on housing supply."
HUD BACKSTOP EXTENDED
The Treasury also said it was indefinitely extending the Federal Financing Bank's support for a housing project risk-sharing initiative between the Department of Housing and Urban Development (HUD) and local housing agencies.
The program was restarted in 2021, leveraging $5 billion in investments to develop and rehabilitate 42,000 affordable rental homes for low-income families, and Adeyemo estimated that the extension will add tens of thousands more units over the next decade.
The Federal Financing Bank provides financing for federal agency borrowing and lending programs.
Reporting by David Lawder; Editing by Andrea Ricci and Chizu Nomiyama
https://www.reuters.com/markets/us/us-t ... 024-03-05/
Re: THE HOUSING MARKET
REUTERS
"US homebuying sentiment up; owners sense a 'good time to sell'"
By Amina Niasse
March 7, 2024
NEW YORK, March 7 (Reuters) - U.S. homebuying sentiment rose for a third consecutive month in February largely because a growing view among current homeowners that now is a good time to sell their house could bode well for a much-needed uptick in home listings.
Fannie Mae’s Home Purchase Sentiment Index increased by 2.1 points in February to 72.8 from 70.7 in January, it said on Thursday.
On a year-over-year basis, it rose by more than 25%.
The share of consumers surveyed who said it is a good time to sell a home rose to 65% in February from 60% the month prior.
That component was the largest contributor to the index's gain.
"Consumer attitudes toward home-selling conditions increased markedly in February, with current homeowners, in particular, expressing greater optimism that it's a 'good time to sell,' a development that may foreshadow an upcoming increase in existing home listings," said Doug Duncan, Fannie Mae's senior vice president and chief economist.
The inventory of homes for sale remains historically low as homebuilding has failed to keep pace with demand and many current homeowners are locked into lower-rate mortgages secured before interest costs started rising.
That has kept many potential sellers from putting their homes on the market.
While the improved seller sentiment foreshadows increased supply, buyer sentiment remained overwhelmingly negative, Duncan said, even as it ticked up slightly to 19% from 17% in January.
With interest rates still high, mortgage payment affordability has weighed on would-be buyers, and the net outlook for mortgage rates falling 5 points on a month-over-month basis, the report said.
"A decline in mortgage rates – and the resulting uptick in sentiment – would obviously bode well for the upcoming spring homebuying season, although affordability will likely remain a significant challenge for buyers, at least until there’s a meaningful addition to net supply," Duncan said.
For the week ended March 7, the average rate on a 30-year fixed-rate home loan fell to 6.88% from 6.94% the week prior, snapping a streak of four weekly increases, according to Freddie Mac data.
Rates have eased from two-decade highs near 8% seen in October, and 35% of consumers expect that trend to continue into 2024, Fannie Mae said.
Reporting by Amina Niasse; Editing by Dan Burns
https://www.reuters.com/markets/us/us-h ... 024-03-07/
"US homebuying sentiment up; owners sense a 'good time to sell'"
By Amina Niasse
March 7, 2024
NEW YORK, March 7 (Reuters) - U.S. homebuying sentiment rose for a third consecutive month in February largely because a growing view among current homeowners that now is a good time to sell their house could bode well for a much-needed uptick in home listings.
Fannie Mae’s Home Purchase Sentiment Index increased by 2.1 points in February to 72.8 from 70.7 in January, it said on Thursday.
On a year-over-year basis, it rose by more than 25%.
The share of consumers surveyed who said it is a good time to sell a home rose to 65% in February from 60% the month prior.
That component was the largest contributor to the index's gain.
"Consumer attitudes toward home-selling conditions increased markedly in February, with current homeowners, in particular, expressing greater optimism that it's a 'good time to sell,' a development that may foreshadow an upcoming increase in existing home listings," said Doug Duncan, Fannie Mae's senior vice president and chief economist.
The inventory of homes for sale remains historically low as homebuilding has failed to keep pace with demand and many current homeowners are locked into lower-rate mortgages secured before interest costs started rising.
That has kept many potential sellers from putting their homes on the market.
While the improved seller sentiment foreshadows increased supply, buyer sentiment remained overwhelmingly negative, Duncan said, even as it ticked up slightly to 19% from 17% in January.
With interest rates still high, mortgage payment affordability has weighed on would-be buyers, and the net outlook for mortgage rates falling 5 points on a month-over-month basis, the report said.
"A decline in mortgage rates – and the resulting uptick in sentiment – would obviously bode well for the upcoming spring homebuying season, although affordability will likely remain a significant challenge for buyers, at least until there’s a meaningful addition to net supply," Duncan said.
For the week ended March 7, the average rate on a 30-year fixed-rate home loan fell to 6.88% from 6.94% the week prior, snapping a streak of four weekly increases, according to Freddie Mac data.
Rates have eased from two-decade highs near 8% seen in October, and 35% of consumers expect that trend to continue into 2024, Fannie Mae said.
Reporting by Amina Niasse; Editing by Dan Burns
https://www.reuters.com/markets/us/us-h ... 024-03-07/
Re: THE HOUSING MARKET
REUTERS
"Yellen says Biden's proposed housing tax credits could boost supply"
By David Lawder and Susan Heavey
March 8, 2024
WASHINGTON, March 8 (Reuters) - President Joe Biden's proposed tax credits for certain home buyers and sellers could help boost the nation's housing supply and make homes more affordable, U.S. Treasury Secretary Janet Yellen said on Friday, a day after the president unveiled the proposal in his annual State of the Union speech.
Yellen said in an interview on MSNBC that Biden's top economic priority was helping Americans deal with higher prices and major living expenses, including the high cost of housing.
The White House said the proposed credit would provide middle-class first-time homebuyers with an annual tax credit of $5,000 a year for two years -- the equivalent of cutting interest rates by more than 1.5 percentage points on the median-priced home.
To encourage more homeowners to sell their "starter homes" to these buyers, Biden is proposing a one-year, $10,000 tax credit, which would apply to homes below their area's median home price.
Many of these buyers are locked into low mortgage rates, and the credit is aimed at offsetting higher mortgage costs for a "trade-up" or downsized home.
According to a White House fact sheet, the credits will aid some 3.5 million first-time homebuyers and 3 million sellers.
Based on credit rates, that would cost some $65 billion over two years.
Asked on MSNBC whether the credits could overheat the economy, Yellen said Biden wanted to make sure that middle-class families could afford to buy homes.
"He's also proposing steps to expand the supply of housing," Yellen said.
"And I believe they would be very helpful: investing in refurbishment of properties, expanding the low-income housing tax credit that will be helpful to Americans deal(ing) with the shortage of affordable housing."
But these credits would need approval by Congress, which is struggling to approve this year's government funding amid Republican demands for spending cuts.
Passage in an election year is extremely unlikely, but a major revamp of the tax code is expected in 2025, when the Republican-passed individual tax cuts expire.
Biden's inclusion of the housing tax credit proposals in his address, along with a pledge to use other tools to encourage the development or renovation of over 2 million homes to close a housing supply gap, underscores the importance of housing affordability on the minds of voters.
"The lack of affordable housing supply is hurting the middle class and depriving first-generation and first-time homebuyers of the financial security that homeownership and the American Dream provide," National Association of Realtors President Kevin Sears said in a statement.
He added that the group was "grateful" that Biden was willing to explore new tax measures to help deal with a shortfall of 5.5 million affordable housing units in the U.S.
In his fiscal 2025 budget on Monday, Biden will also call for an expansion of the Low Income Housing Tax Credit and a $20 billion competitive grant fund to support development of affordable multifamily rental units, the White House said.
Moody's economist Nick Luettke said in a research note that tax incentives to encourage more renters to jump into home ownership would free up apartment units, easing price pressure on that market.
Reporting by Susan Heavey and David Lawder; editing by Paul Grant and Jonathan Oatis
https://www.reuters.com/markets/us/us-t ... 024-03-08/
"Yellen says Biden's proposed housing tax credits could boost supply"
By David Lawder and Susan Heavey
March 8, 2024
WASHINGTON, March 8 (Reuters) - President Joe Biden's proposed tax credits for certain home buyers and sellers could help boost the nation's housing supply and make homes more affordable, U.S. Treasury Secretary Janet Yellen said on Friday, a day after the president unveiled the proposal in his annual State of the Union speech.
Yellen said in an interview on MSNBC that Biden's top economic priority was helping Americans deal with higher prices and major living expenses, including the high cost of housing.
The White House said the proposed credit would provide middle-class first-time homebuyers with an annual tax credit of $5,000 a year for two years -- the equivalent of cutting interest rates by more than 1.5 percentage points on the median-priced home.
To encourage more homeowners to sell their "starter homes" to these buyers, Biden is proposing a one-year, $10,000 tax credit, which would apply to homes below their area's median home price.
Many of these buyers are locked into low mortgage rates, and the credit is aimed at offsetting higher mortgage costs for a "trade-up" or downsized home.
According to a White House fact sheet, the credits will aid some 3.5 million first-time homebuyers and 3 million sellers.
Based on credit rates, that would cost some $65 billion over two years.
Asked on MSNBC whether the credits could overheat the economy, Yellen said Biden wanted to make sure that middle-class families could afford to buy homes.
"He's also proposing steps to expand the supply of housing," Yellen said.
"And I believe they would be very helpful: investing in refurbishment of properties, expanding the low-income housing tax credit that will be helpful to Americans deal(ing) with the shortage of affordable housing."
But these credits would need approval by Congress, which is struggling to approve this year's government funding amid Republican demands for spending cuts.
Passage in an election year is extremely unlikely, but a major revamp of the tax code is expected in 2025, when the Republican-passed individual tax cuts expire.
Biden's inclusion of the housing tax credit proposals in his address, along with a pledge to use other tools to encourage the development or renovation of over 2 million homes to close a housing supply gap, underscores the importance of housing affordability on the minds of voters.
"The lack of affordable housing supply is hurting the middle class and depriving first-generation and first-time homebuyers of the financial security that homeownership and the American Dream provide," National Association of Realtors President Kevin Sears said in a statement.
He added that the group was "grateful" that Biden was willing to explore new tax measures to help deal with a shortfall of 5.5 million affordable housing units in the U.S.
In his fiscal 2025 budget on Monday, Biden will also call for an expansion of the Low Income Housing Tax Credit and a $20 billion competitive grant fund to support development of affordable multifamily rental units, the White House said.
Moody's economist Nick Luettke said in a research note that tax incentives to encourage more renters to jump into home ownership would free up apartment units, easing price pressure on that market.
Reporting by Susan Heavey and David Lawder; editing by Paul Grant and Jonathan Oatis
https://www.reuters.com/markets/us/us-t ... 024-03-08/
Re: THE HOUSING MARKET
REUTERS
"US single-family housing starts, permits near two-year highs"
By Lucia Mutikani
March 19, 2024
Summary
* Single-family housing starts surge 11.6% in February
* Single-family building permits increase 1.0%
* Completions soar 20.2%; houses under construction up 0.3%
WASHINGTON, March 19 (Reuters) - U.S. single-family homebuilding rebounded sharply in February, hitting the highest level in nearly two years, boosted by mild temperatures and a persistent shortage of previously owned houses on the market.
Despite the hurdle created for many first-time buyers by higher mortgage rates, builders are cutting prices and offering other incentives to increase sales.
They are also reducing the size of the homes being built to manage higher material costs.
The report from the Commerce Department on Tuesday also showed permits for the future construction of single-family housing units rose to more than a 1-1/2-year high last month.
With mortgage rates gradually trending lower on expectations the Federal Reserve will start cutting interest rates by June, homebuilding could contribute to economic growth this year.
"Single-family starts could remain strong in the next couple of months as builders continue to see demand for new builds despite the headwinds facing buyers," said Daniel Vielhaber, an economist at Nationwide.
"Rate incentives from builders continue to help buyers afford homes on the new side of the market."
Single-family housing starts, which account for the bulk of homebuilding, surged 11.6% to a seasonally adjusted annual rate of 1.129 million units last month, the Commerce Department's Census Bureau said.
That was the highest level since April 2022.
Data for January was revised up to show single-family starts falling to a rate of 1.012 million units instead of the previously reported 1.004 million units.
Though the housing market has been pummeled by aggressive rate hikes from the U.S. central bank as it battles inflation, homebuilding has been supported by an acute housing shortage, with most homeowners locked into lower mortgage rates.
Recent government data showed there were 757,000 housing units for sale in the fourth quarter, well below the 1.145 million units before the COVID-19 pandemic.
A survey from the National Association of Home Builders on Monday showed confidence among single-family home builders rose to an eight-month high in March amid optimism about sales now and over the coming six months.
Fed officials were expected to leave the central bank's policy rate unchanged in the current 5.25%-5.50% range at the end of a two-day meeting on Wednesday, having raised it by 525 basis points since March 2022.
The average rate on the popular 30-year fixed-rate mortgage has retreated in recent weeks after flirting with the 7% level in late February, according to data from mortgage finance agency Freddie Mac.
Single-family homebuilding jumped 40.2% in the Midwest and increased 16.6% in the densely populated South.
It accelerated 16.4% in the Northeast, but declined 15.4% in the West.
Starts for housing projects with five units or more advanced 8.6% to a rate of 377,000 units.
Overall housing starts increased 10.7% to a rate of 1.521 million units in February.
Economists polled by Reuters had forecast starts would rebound to a rate 1.425 million units.
Single-family building permits rose 1.0% to a rate of 1.031 million units in February, the highest level since May 2022.
Multi-family building permits rose 2.4% to a rate of 429,000 units.
Building permits as a whole climbed 1.9% to a rate of 1.518 million units.
Homebuilding activity this year is expected to be concentrated in the single-family housing segment amid a huge backlog of multi-family units under construction.
Residential investment rebounded in the second half of 2023 after contracting for nine straight quarters, the longest such stretch since the housing market collapse in 2006.
It has been a drag on gross domestic product for two straight years.
"Housing construction is likely to add modestly to economic growth in the months ahead as builders look forward to the Fed rate cuts that policymakers are forecasting for later this year," said Christopher Rupkey, chief economist at FWDBONDS.
"Housing construction has likely turned the corner in this economic cycle and will cease to be a drag on the overall economy."
A minority of economists believe the Fed will not cut rates this year, especially if inflation remains elevated.
Stocks on Wall Street mostly were trading lower.
The dollar gained versus a basket of currencies.
Prices of U.S. Treasuries rose.
MORE COMPLETIONS
The number of houses approved for construction that were yet to be started increased 0.4% to 270,000 units in February.
The single-family homebuilding backlog fell 1.4% to 141,000 units.
The completions rate for that housing segment surged 20.2% to 1.072 million units, the highest level since November 2022.
Overall housing completions soared 19.7% to a rate of 1.729 million units, the highest level since January 2007.
That is goods news for supply, which is keeping house prices high and contributing to rental inflation.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month over time to bridge the inventory gap.
The number of housing units under construction slipped 0.5% to a rate of 1.666 million units.
The inventory of single-family housing under construction rose 0.3% to a rate of 683,000 units.
The stock of multi-family housing under construction dropped 1.0% to 966,000 units.
Multi-family housing inventory under construction hit a record 1.001 million units in July 2023.
An increased supply of apartments will slow growth in rental prices, the major driver of inflation.
"More multi-family units should continue to weigh on rental inflation, which is decelerating but still elevated," said Nancy Vanden Houten, U.S. lead economist at Oxford Economics.
Reporting by Lucia Mutikani; Editing by Kirsten Donovan and Paul Simao
https://www.reuters.com/markets/us/us-s ... 024-03-19/
"US single-family housing starts, permits near two-year highs"
By Lucia Mutikani
March 19, 2024
Summary
* Single-family housing starts surge 11.6% in February
* Single-family building permits increase 1.0%
* Completions soar 20.2%; houses under construction up 0.3%
WASHINGTON, March 19 (Reuters) - U.S. single-family homebuilding rebounded sharply in February, hitting the highest level in nearly two years, boosted by mild temperatures and a persistent shortage of previously owned houses on the market.
Despite the hurdle created for many first-time buyers by higher mortgage rates, builders are cutting prices and offering other incentives to increase sales.
They are also reducing the size of the homes being built to manage higher material costs.
The report from the Commerce Department on Tuesday also showed permits for the future construction of single-family housing units rose to more than a 1-1/2-year high last month.
With mortgage rates gradually trending lower on expectations the Federal Reserve will start cutting interest rates by June, homebuilding could contribute to economic growth this year.
"Single-family starts could remain strong in the next couple of months as builders continue to see demand for new builds despite the headwinds facing buyers," said Daniel Vielhaber, an economist at Nationwide.
"Rate incentives from builders continue to help buyers afford homes on the new side of the market."
Single-family housing starts, which account for the bulk of homebuilding, surged 11.6% to a seasonally adjusted annual rate of 1.129 million units last month, the Commerce Department's Census Bureau said.
That was the highest level since April 2022.
Data for January was revised up to show single-family starts falling to a rate of 1.012 million units instead of the previously reported 1.004 million units.
Though the housing market has been pummeled by aggressive rate hikes from the U.S. central bank as it battles inflation, homebuilding has been supported by an acute housing shortage, with most homeowners locked into lower mortgage rates.
Recent government data showed there were 757,000 housing units for sale in the fourth quarter, well below the 1.145 million units before the COVID-19 pandemic.
A survey from the National Association of Home Builders on Monday showed confidence among single-family home builders rose to an eight-month high in March amid optimism about sales now and over the coming six months.
Fed officials were expected to leave the central bank's policy rate unchanged in the current 5.25%-5.50% range at the end of a two-day meeting on Wednesday, having raised it by 525 basis points since March 2022.
The average rate on the popular 30-year fixed-rate mortgage has retreated in recent weeks after flirting with the 7% level in late February, according to data from mortgage finance agency Freddie Mac.
Single-family homebuilding jumped 40.2% in the Midwest and increased 16.6% in the densely populated South.
It accelerated 16.4% in the Northeast, but declined 15.4% in the West.
Starts for housing projects with five units or more advanced 8.6% to a rate of 377,000 units.
Overall housing starts increased 10.7% to a rate of 1.521 million units in February.
Economists polled by Reuters had forecast starts would rebound to a rate 1.425 million units.
Single-family building permits rose 1.0% to a rate of 1.031 million units in February, the highest level since May 2022.
Multi-family building permits rose 2.4% to a rate of 429,000 units.
Building permits as a whole climbed 1.9% to a rate of 1.518 million units.
Homebuilding activity this year is expected to be concentrated in the single-family housing segment amid a huge backlog of multi-family units under construction.
Residential investment rebounded in the second half of 2023 after contracting for nine straight quarters, the longest such stretch since the housing market collapse in 2006.
It has been a drag on gross domestic product for two straight years.
"Housing construction is likely to add modestly to economic growth in the months ahead as builders look forward to the Fed rate cuts that policymakers are forecasting for later this year," said Christopher Rupkey, chief economist at FWDBONDS.
"Housing construction has likely turned the corner in this economic cycle and will cease to be a drag on the overall economy."
A minority of economists believe the Fed will not cut rates this year, especially if inflation remains elevated.
Stocks on Wall Street mostly were trading lower.
The dollar gained versus a basket of currencies.
Prices of U.S. Treasuries rose.
MORE COMPLETIONS
The number of houses approved for construction that were yet to be started increased 0.4% to 270,000 units in February.
The single-family homebuilding backlog fell 1.4% to 141,000 units.
The completions rate for that housing segment surged 20.2% to 1.072 million units, the highest level since November 2022.
Overall housing completions soared 19.7% to a rate of 1.729 million units, the highest level since January 2007.
That is goods news for supply, which is keeping house prices high and contributing to rental inflation.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month over time to bridge the inventory gap.
The number of housing units under construction slipped 0.5% to a rate of 1.666 million units.
The inventory of single-family housing under construction rose 0.3% to a rate of 683,000 units.
The stock of multi-family housing under construction dropped 1.0% to 966,000 units.
Multi-family housing inventory under construction hit a record 1.001 million units in July 2023.
An increased supply of apartments will slow growth in rental prices, the major driver of inflation.
"More multi-family units should continue to weigh on rental inflation, which is decelerating but still elevated," said Nancy Vanden Houten, U.S. lead economist at Oxford Economics.
Reporting by Lucia Mutikani; Editing by Kirsten Donovan and Paul Simao
https://www.reuters.com/markets/us/us-s ... 024-03-19/
Re: THE HOUSING MARKET
The National Review
"Biden’s Latest Housing Proposal Is Like a Bad Credit-Card Promotion"
Story by The Editors
25 MARCH 2024
During the pandemic, rock-bottom interest rates and a desire for more space drove a rapid and stunning rise in housing prices.
While prices have moderated from their peak, they have not done so nearly enough to make up for the more than doubling of borrowing costs.
President Biden says he has a solution, but like most forms of government interference, it would only make the problem worse.
During the State of the Union address, Biden unveiled a plan to give homebuyers $400 per month for mortgage payments over the next two years “as mortgage rates come down.”
It didn’t take long for most people with a basic understanding of economics or an ounce of common sense to recognize that government subsidies — especially during a time of falling interest rates — would lead to more demand and, thus, even higher housing prices.
No problem, Biden now says — he has an idea to increase housing supply.
Right now, one of the reasons why inventory is relatively scarce is that a lot of homeowners who locked in low-interest-rate mortgages for decades are reluctant to sell and be forced to purchase a new home with higher rates.
In response, Biden wants to offer up to $10,000 per year in tax credits to those who sell their starter homes and purchase new homes with higher-rate mortgages.
This, the theory goes, would help unlock inventory.
But — on top of the cost to other taxpayers — it would be a rotten deal for any homeowner to take Biden up on such a proposal.
To start with, the closing costs associated with selling and then buying a home (broker commissions, inspection and appraisal fees, loan-origination fees, etc.) would easily take up most if not all of that $10,000.
But more importantly, increased housing payments would quickly exceed $10,000, and after that credit expires after the first year, the new homeowner would be drastically worse off.
Just to provide an example, according to Rocket Mortgage, “first-time home buyers tend to stay in their homes for about 11 years.”
Eleven years ago, according to the St. Louis Fed, the average 30-year fixed mortgage was 3.52 percent and the median house sold for $258,400.
Now, the most recent data have the median sales price at $417,700 and interest rate at 6.87 percent.
Assuming the recommended 20 percent down payment, the mortgage payment on a median home purchased in March 2013 would be $931 per month, compared with $2,194 today.
That’s a difference of $1,263 per month, or over $15,000 per year.
In scenario one (staying in their current house), the homeowner would have $212,268 in remaining mortgage payments over 19 years and then would be free of mortgage debt.
In scenario two (selling), the homeowner would have to pay $500,232 over the next 19 years, and a total of $789,840 in remaining payments.
This isn’t to say that nobody should ever sell their current homes, as there are a number of reasons why somebody might want to change their current residence — change of job, desire for a new neighborhood, children leaving the house, etc.
But from a purely financial standpoint, Biden’s proposal would make no sense as it could leave sellers worse off by hundreds of thousands of dollars over time.
Biden’s scheme sounds a lot like one of those credit-card promotions that offer zero-percent interest for a short period of time, only to slam consumers with sky-high interest rates once the promotional period ends.
Ironically, those are the sorts of promotions that the Democrats’ beloved Consumer Financial Protection Bureau has been warning about for a decade.
But Biden’s plan is an even worse deal.
For consumers who are careful of the fine print and pay off their full balance before the higher rate kicks in, promotional rates could be a way to save money and pay off debt quicker.
In every imaginable circumstance, selling a house with a historically low mortgage rate and buying a more expensive house at a much higher mortgage rate is going to be a bad deal.
Luckily, Biden’s cockamamie proposal would have to clear Congress, where it has no chance of passage.
But as a window into the type of policies he would push in a second term were he reelected with Democratic control of the House and Senate, it is alarming.
https://www.msn.com/en-us/money/realest ... 4363&ei=25
"Biden’s Latest Housing Proposal Is Like a Bad Credit-Card Promotion"
Story by The Editors
25 MARCH 2024
During the pandemic, rock-bottom interest rates and a desire for more space drove a rapid and stunning rise in housing prices.
While prices have moderated from their peak, they have not done so nearly enough to make up for the more than doubling of borrowing costs.
President Biden says he has a solution, but like most forms of government interference, it would only make the problem worse.
During the State of the Union address, Biden unveiled a plan to give homebuyers $400 per month for mortgage payments over the next two years “as mortgage rates come down.”
It didn’t take long for most people with a basic understanding of economics or an ounce of common sense to recognize that government subsidies — especially during a time of falling interest rates — would lead to more demand and, thus, even higher housing prices.
No problem, Biden now says — he has an idea to increase housing supply.
Right now, one of the reasons why inventory is relatively scarce is that a lot of homeowners who locked in low-interest-rate mortgages for decades are reluctant to sell and be forced to purchase a new home with higher rates.
In response, Biden wants to offer up to $10,000 per year in tax credits to those who sell their starter homes and purchase new homes with higher-rate mortgages.
This, the theory goes, would help unlock inventory.
But — on top of the cost to other taxpayers — it would be a rotten deal for any homeowner to take Biden up on such a proposal.
To start with, the closing costs associated with selling and then buying a home (broker commissions, inspection and appraisal fees, loan-origination fees, etc.) would easily take up most if not all of that $10,000.
But more importantly, increased housing payments would quickly exceed $10,000, and after that credit expires after the first year, the new homeowner would be drastically worse off.
Just to provide an example, according to Rocket Mortgage, “first-time home buyers tend to stay in their homes for about 11 years.”
Eleven years ago, according to the St. Louis Fed, the average 30-year fixed mortgage was 3.52 percent and the median house sold for $258,400.
Now, the most recent data have the median sales price at $417,700 and interest rate at 6.87 percent.
Assuming the recommended 20 percent down payment, the mortgage payment on a median home purchased in March 2013 would be $931 per month, compared with $2,194 today.
That’s a difference of $1,263 per month, or over $15,000 per year.
In scenario one (staying in their current house), the homeowner would have $212,268 in remaining mortgage payments over 19 years and then would be free of mortgage debt.
In scenario two (selling), the homeowner would have to pay $500,232 over the next 19 years, and a total of $789,840 in remaining payments.
This isn’t to say that nobody should ever sell their current homes, as there are a number of reasons why somebody might want to change their current residence — change of job, desire for a new neighborhood, children leaving the house, etc.
But from a purely financial standpoint, Biden’s proposal would make no sense as it could leave sellers worse off by hundreds of thousands of dollars over time.
Biden’s scheme sounds a lot like one of those credit-card promotions that offer zero-percent interest for a short period of time, only to slam consumers with sky-high interest rates once the promotional period ends.
Ironically, those are the sorts of promotions that the Democrats’ beloved Consumer Financial Protection Bureau has been warning about for a decade.
But Biden’s plan is an even worse deal.
For consumers who are careful of the fine print and pay off their full balance before the higher rate kicks in, promotional rates could be a way to save money and pay off debt quicker.
In every imaginable circumstance, selling a house with a historically low mortgage rate and buying a more expensive house at a much higher mortgage rate is going to be a bad deal.
Luckily, Biden’s cockamamie proposal would have to clear Congress, where it has no chance of passage.
But as a window into the type of policies he would push in a second term were he reelected with Democratic control of the House and Senate, it is alarming.
https://www.msn.com/en-us/money/realest ... 4363&ei=25
Re: THE HOUSING MARKET
REUTERS
"US new home sales fall; median price lowest in more than 2-1/2 years"
By Lucia Mutikani
March 25, 2024
Summary
* New home sales slip 0.3% in February; up 5.9% year-on-year
* Median new home price drops 7.6% from year ago
WASHINGTON, March 25 (Reuters) - Sales of new U.S. single-family homes unexpectedly fell in February after mortgage rates increased during the month, but the underlying trend remained strong amid a chronic shortage of previously owned houses on the market.
The report from the Commerce Department on Monday also showed the median new house price last month was the lowest in more than 2-1/2 years, while supply was the highest since November 2022.
Builders are ramping up construction, while offering price cuts and other incentives as well as reducing floor size to make housing more affordable.
"Housing activity is stabilizing as homebuilders appear to be building cheaper, and therefore, likely smaller homes," said Conrad DeQuadros, senior economic advisor at Brean Capital.
"Sales have been relatively stable at December's level over the last two months and prices have been falling at mid-single-digit rates on a year-over-year basis."
New home sales slipped 0.3% to a seasonally adjusted annual rate of 662,000 units last month, the Commerce Department's Census Bureau said.
The sales pace for January was revised up to 664,000 units from the previously reported 661,000 units.
Economists polled by Reuters had forecast new home sales, which account for 13.1% of U.S. home sales, would rise to a rate of 675,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales advanced 5.9% on a year-on-year basis in February.
The new homes market has defied 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022, bolstered by a dearth of previously owned houses for sale.
The overall housing market has likely turned the corner, with home resales surging to a one-year high in February.
Nonetheless, supply remains inadequate, keeping house prices elevated and homeownership out of the reach of many.
The average rate on the popular 30-year fixed-rate mortgage jumped to 6.94% in late February, before retreating to just below 7.0% by mid-March, according to data from mortgage finance agency Freddie Mac.
The U.S. central bank is expected to start cutting rates sometime this year.
Stocks on Wall Street were trading lower.
The dollar rose against a basket of currencies.
U.S. Treasury prices fell.
UPBEAT OUTLOOK
Last month, new home sales plunged 31.5% in the Northeast and declined 2.4% in the Midwest.
Sales in the densely populated South increased 3.7% and climbed 2.3% in the West.
"It's worth noting that mortgage rates rose from 6.8% to 7.0% in the same month, which probably put some buyers off entering the market," said Thomas Ryan, property economist at Capital Economics.
"We're sticking with our upbeat forecast for new home sales over the next few years."
A survey from the National Association of Home Builders last week showed a measure of sales over the next six months rising to a nine-month high in March.
A gauge of prospective buyers was the highest since last August.
The median new house price in February was $400,500, the lowest since June 2021 and a 7.6% drop from a year ago.
Economists welcomed the decline in the median new house price, which they said bode well for both affordability and inflation.
Housing, through higher rents, has accounted for much of the increase in inflation.
Overall house prices, however, continue to rise because of the supply squeeze in the home resales market.
Most of the new homes sold last month were in the $300,000-$399,000 price range.
The government reported last week that housing completions hit their highest level in 17 years in February.
More new home supply is in the pipeline, which could further dampen house price inflation.
There were 463,000 new homes on the market at the end of February, the most since November 2022.
That was up from 457,000 units in January.
At February's sales pace it would take 8.4 months to clear the supply of houses on the market, up from 8.3 months in January.
Houses under construction accounted for 58.7% of inventory.
Homes yet to be built made 22.9% of supply, while completed houses accounted for 18.4%.
"Rate incentives from builders are still able to ease the financial burden for buyers and have made new homes more appealing, but it's unknown for how long builders can continue to offer such incentives," said Daniel Vielhaber, an economist at Nationwide.
Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/markets/us/us-n ... 024-03-25/
"US new home sales fall; median price lowest in more than 2-1/2 years"
By Lucia Mutikani
March 25, 2024
Summary
* New home sales slip 0.3% in February; up 5.9% year-on-year
* Median new home price drops 7.6% from year ago
WASHINGTON, March 25 (Reuters) - Sales of new U.S. single-family homes unexpectedly fell in February after mortgage rates increased during the month, but the underlying trend remained strong amid a chronic shortage of previously owned houses on the market.
The report from the Commerce Department on Monday also showed the median new house price last month was the lowest in more than 2-1/2 years, while supply was the highest since November 2022.
Builders are ramping up construction, while offering price cuts and other incentives as well as reducing floor size to make housing more affordable.
"Housing activity is stabilizing as homebuilders appear to be building cheaper, and therefore, likely smaller homes," said Conrad DeQuadros, senior economic advisor at Brean Capital.
"Sales have been relatively stable at December's level over the last two months and prices have been falling at mid-single-digit rates on a year-over-year basis."
New home sales slipped 0.3% to a seasonally adjusted annual rate of 662,000 units last month, the Commerce Department's Census Bureau said.
The sales pace for January was revised up to 664,000 units from the previously reported 661,000 units.
Economists polled by Reuters had forecast new home sales, which account for 13.1% of U.S. home sales, would rise to a rate of 675,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales advanced 5.9% on a year-on-year basis in February.
The new homes market has defied 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022, bolstered by a dearth of previously owned houses for sale.
The overall housing market has likely turned the corner, with home resales surging to a one-year high in February.
Nonetheless, supply remains inadequate, keeping house prices elevated and homeownership out of the reach of many.
The average rate on the popular 30-year fixed-rate mortgage jumped to 6.94% in late February, before retreating to just below 7.0% by mid-March, according to data from mortgage finance agency Freddie Mac.
The U.S. central bank is expected to start cutting rates sometime this year.
Stocks on Wall Street were trading lower.
The dollar rose against a basket of currencies.
U.S. Treasury prices fell.
UPBEAT OUTLOOK
Last month, new home sales plunged 31.5% in the Northeast and declined 2.4% in the Midwest.
Sales in the densely populated South increased 3.7% and climbed 2.3% in the West.
"It's worth noting that mortgage rates rose from 6.8% to 7.0% in the same month, which probably put some buyers off entering the market," said Thomas Ryan, property economist at Capital Economics.
"We're sticking with our upbeat forecast for new home sales over the next few years."
A survey from the National Association of Home Builders last week showed a measure of sales over the next six months rising to a nine-month high in March.
A gauge of prospective buyers was the highest since last August.
The median new house price in February was $400,500, the lowest since June 2021 and a 7.6% drop from a year ago.
Economists welcomed the decline in the median new house price, which they said bode well for both affordability and inflation.
Housing, through higher rents, has accounted for much of the increase in inflation.
Overall house prices, however, continue to rise because of the supply squeeze in the home resales market.
Most of the new homes sold last month were in the $300,000-$399,000 price range.
The government reported last week that housing completions hit their highest level in 17 years in February.
More new home supply is in the pipeline, which could further dampen house price inflation.
There were 463,000 new homes on the market at the end of February, the most since November 2022.
That was up from 457,000 units in January.
At February's sales pace it would take 8.4 months to clear the supply of houses on the market, up from 8.3 months in January.
Houses under construction accounted for 58.7% of inventory.
Homes yet to be built made 22.9% of supply, while completed houses accounted for 18.4%.
"Rate incentives from builders are still able to ease the financial burden for buyers and have made new homes more appealing, but it's unknown for how long builders can continue to offer such incentives," said Daniel Vielhaber, an economist at Nationwide.
Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/markets/us/us-n ... 024-03-25/
Re: THE HOUSING MARKET
REUTERS
"U.S. annual home price growth slowed in January, FHFA says"
By Amina Niasse
March 26, 2024
NEW YORK, March 26 (Reuters) - U.S. annual home prices rose at a slower rate in January and slipped on a monthly basis for the first time in 17 months, data released Tuesday showed.
Home prices grew 6.3% on a yearly basis from an upwardly revised 6.7% in December, a Federal Housing Finance Agency (FHFA) report said, marking the first annual price deceleration since last May.
On a monthly basis, home prices fell for the first time since August 2022 by 0.1% in January, reversing a 0.1% gain in December.
Despite the slowdown, annual price growth remains near the historical average, said Dr. Anju Vajja deputy director at FHFA's Division of Research and Statistics.
Home price growth has persisted through two-decade-high mortgage rates, with house values appreciating throughout the Federal Reserve's interest rate hike campaign launched in 2022.
On a yearly basis, prices increased in all U.S. regions.
The East North Central and Middle Atlantic regions experienced the largest price appreciations, by 8.7% and 8.6%, respectively, FHFA said.
Reporting by Amina Niasse; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-a ... 024-03-26/
"U.S. annual home price growth slowed in January, FHFA says"
By Amina Niasse
March 26, 2024
NEW YORK, March 26 (Reuters) - U.S. annual home prices rose at a slower rate in January and slipped on a monthly basis for the first time in 17 months, data released Tuesday showed.
Home prices grew 6.3% on a yearly basis from an upwardly revised 6.7% in December, a Federal Housing Finance Agency (FHFA) report said, marking the first annual price deceleration since last May.
On a monthly basis, home prices fell for the first time since August 2022 by 0.1% in January, reversing a 0.1% gain in December.
Despite the slowdown, annual price growth remains near the historical average, said Dr. Anju Vajja deputy director at FHFA's Division of Research and Statistics.
Home price growth has persisted through two-decade-high mortgage rates, with house values appreciating throughout the Federal Reserve's interest rate hike campaign launched in 2022.
On a yearly basis, prices increased in all U.S. regions.
The East North Central and Middle Atlantic regions experienced the largest price appreciations, by 8.7% and 8.6%, respectively, FHFA said.
Reporting by Amina Niasse; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-a ... 024-03-26/
Re: THE HOUSING MARKET
REUTERS
"US banks face loss risk from multi-family property loan exposure, says Fitch"
By Matt Tracy
March 27, 2024
WASHINGTON, March 27 (Reuters) - U.S. banks with significant lending exposure to some multi-family properties and particularly rent-controlled housing are vulnerable to posting losses this year on rising costs facing landlords, according to Fitch Ratings analysts.
On a Wednesday call, Fitch Ratings analysts highlighted the risks facing banks which have underwritten loans behind apartment complexes and other multifamily properties.
Lending by banks to multifamily borrowers grew 32% since 2020 to $613 billion at the end of 2023, according to a March 19 report by Fitch.
But supply has begun to outstrip demand, creating downward pressure on the rents landlords can charge, Fitch noted during Wednesday's call.
These landlords also face rising interest rates and insurance premiums, coupled with decreasing apartment values.
These factors have weighed on several regional banks with high exposure to the asset class, and in particular those most exposed to rent-controlled multifamily loans, where landlords face a ceiling on rent increases to offset rising costs.
"Especially in the more stringent rent-controlled areas, there is a limited ability to make up that difference," said Brian Thies, senior director at Fitch, on Wednesday's call.
"So I would say it can be a concern for loan performance at this point."
This was seen in late February, when regional bank New York Community Bancorp posted $2.7 billion in losses and a $552 million provision for credit losses in its fourth quarter, including on a New York-based rent-controlled multifamily loan.
Fitch highlighted 10 banks with the greatest multifamily loan exposure as of year-end 2023.
Flagstar Bank, which merged with New York Community Bancorp in 2022, topped the list with 43.6% of its loan portfolio in multifamily.
Other banks with a high proportion of multifamily loans include First Foundation Bank, Dime Community Bank, Pacific Premier Bank and Apple Bank for Savings, according to Fitch.
These and other banks are exposed to rent-controlled multifamily loan markets in states with stringent rent-control laws including California, New York, New Jersey and Oregon.
There were 49 banks at the end of 2023 with at least 5% of multifamily loans past due on their payments, the ratings agency noted.
Most of these consisted of regional and community banks.
The most capital-constrained banks will likely look to sell more of these loans - and at a loss, the Fitch analysts noted.
"We would consider most U.S. banks as well-reserved currently for multifamily lending," Thies said.
"But it's generally going to come down to the value of the collateral and how readily the bank can dispose of that."
Reporting by Matt Tracy; editing by Costas Pitas
https://www.reuters.com/business/financ ... 024-03-27/
"US banks face loss risk from multi-family property loan exposure, says Fitch"
By Matt Tracy
March 27, 2024
WASHINGTON, March 27 (Reuters) - U.S. banks with significant lending exposure to some multi-family properties and particularly rent-controlled housing are vulnerable to posting losses this year on rising costs facing landlords, according to Fitch Ratings analysts.
On a Wednesday call, Fitch Ratings analysts highlighted the risks facing banks which have underwritten loans behind apartment complexes and other multifamily properties.
Lending by banks to multifamily borrowers grew 32% since 2020 to $613 billion at the end of 2023, according to a March 19 report by Fitch.
But supply has begun to outstrip demand, creating downward pressure on the rents landlords can charge, Fitch noted during Wednesday's call.
These landlords also face rising interest rates and insurance premiums, coupled with decreasing apartment values.
These factors have weighed on several regional banks with high exposure to the asset class, and in particular those most exposed to rent-controlled multifamily loans, where landlords face a ceiling on rent increases to offset rising costs.
"Especially in the more stringent rent-controlled areas, there is a limited ability to make up that difference," said Brian Thies, senior director at Fitch, on Wednesday's call.
"So I would say it can be a concern for loan performance at this point."
This was seen in late February, when regional bank New York Community Bancorp posted $2.7 billion in losses and a $552 million provision for credit losses in its fourth quarter, including on a New York-based rent-controlled multifamily loan.
Fitch highlighted 10 banks with the greatest multifamily loan exposure as of year-end 2023.
Flagstar Bank, which merged with New York Community Bancorp in 2022, topped the list with 43.6% of its loan portfolio in multifamily.
Other banks with a high proportion of multifamily loans include First Foundation Bank, Dime Community Bank, Pacific Premier Bank and Apple Bank for Savings, according to Fitch.
These and other banks are exposed to rent-controlled multifamily loan markets in states with stringent rent-control laws including California, New York, New Jersey and Oregon.
There were 49 banks at the end of 2023 with at least 5% of multifamily loans past due on their payments, the ratings agency noted.
Most of these consisted of regional and community banks.
The most capital-constrained banks will likely look to sell more of these loans - and at a loss, the Fitch analysts noted.
"We would consider most U.S. banks as well-reserved currently for multifamily lending," Thies said.
"But it's generally going to come down to the value of the collateral and how readily the bank can dispose of that."
Reporting by Matt Tracy; editing by Costas Pitas
https://www.reuters.com/business/financ ... 024-03-27/
Re: THE HOUSING MARKET
REUTERS
"US homebuilding retreats; manufacturing turning the corner"
By Lucia Mutikani
April 16, 2024
Summary
* Single-family housing starts drop 12.4% in March
* Single-family building permits decline 5.7%
* Overall housing starts fall 14.7%; permits down 4.3%
* Manufacturing output rises 0.5%; February data revised up
WASHINGTON, April 16 (Reuters) - U.S. single-family homebuilding tumbled in March, and while new construction remains underpinned by a severe shortage of previously owned houses for sale, a resurgence in mortgage rates is pushing potential buyers to the sidelines.
The report from the Commerce Department on Tuesday also showed permits for future construction of single-family houses fell to a five-month low.
Residential investment rebounded in the second half of 2023 after contracting for nine straight quarters, the longest such stretch since the housing market collapse in 2006.
But the recovery appears to be losing steam.
"The housing recovery has stalled for now as home builder expectations of sharply lower interest rates this year have faded," said Christopher Rupkey, chief economist at FWDBONDS.
"One thing is for certain, and that is home prices are going to be on an upward, more unaffordable trend without more supply."
Single-family housing starts, which account for the bulk of homebuilding, dropped 12.4% to a seasonally adjusted annual rate of 1.022 million units last month, the Commerce Department's Census Bureau said.
Data for February was revised higher to show single-family starts rebounding to a rate of 1.167 million units instead of the previously reported 1.129 million units.
Single-family home building increased 21.2% on a year-on-year basis in March.
Wet weather could have impacted groundbreaking activity last month.
Homebuilding fell in the Northeast, Midwest and the densely populated South, but rose in the West.
The latest government data showed there were 757,000 housing units on the market in the fourth quarter, well below the 1.145 million units before the COVID-19 pandemic.
A survey from the National Association of Home Builders (NAHB) on Monday showed confidence among single-family home builders was unchanged at an eight-month high in April.
The NAHB said "buyers are hesitating until they can better gauge where interest rates are headed."
The average rate on the popular 30-year fixed-rate mortgage has drifted up towards 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated rate cut this year.
A few economists doubt that the U.S. central bank will lower borrowing costs in 2024.
Fed Chair Jerome Powell said on Tuesday the central bank might need to keep rates higher for longer than previously thought as inflation remains elevated.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March of 2022.
Stocks on Wall Street fell on Powell's comments.
The dollar gained versus a basket of currencies.
U.S. Treasury yields rose.
HOUSING COMPLETIONS DECLINE
Starts for housing projects with five units or more plunged 20.8% to a rate of 290,000 units, the lowest level since April 2020.
Overall housing starts plummeted 14.7%, the biggest drop since April 2020, to a rate of 1.321 million units in March.
Economists polled by Reuters had forecast starts would fall to a rate 1.487 million units.
Permits for future construction of single-family homes fell 5.7% to a rate of 973,000 units in March, the lowest level since last October.
That likely reflects the recent rise in mortgage rates and suggests slower homebuilding activity ahead.
Multi-family building permits were unchanged at a rate of 433,000 units.
Building permits as a whole dropped 4.3% to a rate of 1.458 million units, the lowest level since last July.
Economists expect housing made a small contribution to gross domestic product growth in the first quarter.
The fortunes of the housing market are seen tied to upcoming inflation data.
The number of houses approved for construction that were yet to be started rose 0.7% to 273,000 units in March.
The single-family homebuilding backlog was unchanged at 141,000 units.
The completion rate for that housing segment declined 10.5% to 947,000 units, suggesting that supply could remain low and keep prices elevated.
Overall housing completions decreased 13.5% to a rate of 1.469 million units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month over time to bridge the inventory gap.
Multi-family starts and permits surged in the aftermath of the pandemic, with the building backlog hitting record highs.
"With a typical 1.5-2-year time from start to completion, most of these units are being completed," said Alice Zheng, an economist at Citigroup.
"We should see less incoming multi-family supply, which could put pressure on housing prices."
While housing took a step back last month, manufacturing appears to be turning the corner.
These two sectors were the most impacted by the Fed's tighter monetary policy stance.
A separate report from the Fed on Tuesday showed production at factories increased 0.5% in March after rebounding by 1.2% in February.
Factory output edged down at a 0.1% annualized rate in the first quarter after contracting at a 0.9% pace in the October-December period.
"Manufactured output exits the first quarter at a high level relative to the quarterly average, which potentially sets the stage for a solid advance in output in the second quarter," said John Ryding, chief economic advisor at Brean Capital.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-s ... 024-04-16/
"US homebuilding retreats; manufacturing turning the corner"
By Lucia Mutikani
April 16, 2024
Summary
* Single-family housing starts drop 12.4% in March
* Single-family building permits decline 5.7%
* Overall housing starts fall 14.7%; permits down 4.3%
* Manufacturing output rises 0.5%; February data revised up
WASHINGTON, April 16 (Reuters) - U.S. single-family homebuilding tumbled in March, and while new construction remains underpinned by a severe shortage of previously owned houses for sale, a resurgence in mortgage rates is pushing potential buyers to the sidelines.
The report from the Commerce Department on Tuesday also showed permits for future construction of single-family houses fell to a five-month low.
Residential investment rebounded in the second half of 2023 after contracting for nine straight quarters, the longest such stretch since the housing market collapse in 2006.
But the recovery appears to be losing steam.
"The housing recovery has stalled for now as home builder expectations of sharply lower interest rates this year have faded," said Christopher Rupkey, chief economist at FWDBONDS.
"One thing is for certain, and that is home prices are going to be on an upward, more unaffordable trend without more supply."
Single-family housing starts, which account for the bulk of homebuilding, dropped 12.4% to a seasonally adjusted annual rate of 1.022 million units last month, the Commerce Department's Census Bureau said.
Data for February was revised higher to show single-family starts rebounding to a rate of 1.167 million units instead of the previously reported 1.129 million units.
Single-family home building increased 21.2% on a year-on-year basis in March.
Wet weather could have impacted groundbreaking activity last month.
Homebuilding fell in the Northeast, Midwest and the densely populated South, but rose in the West.
The latest government data showed there were 757,000 housing units on the market in the fourth quarter, well below the 1.145 million units before the COVID-19 pandemic.
A survey from the National Association of Home Builders (NAHB) on Monday showed confidence among single-family home builders was unchanged at an eight-month high in April.
The NAHB said "buyers are hesitating until they can better gauge where interest rates are headed."
The average rate on the popular 30-year fixed-rate mortgage has drifted up towards 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated rate cut this year.
A few economists doubt that the U.S. central bank will lower borrowing costs in 2024.
Fed Chair Jerome Powell said on Tuesday the central bank might need to keep rates higher for longer than previously thought as inflation remains elevated.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March of 2022.
Stocks on Wall Street fell on Powell's comments.
The dollar gained versus a basket of currencies.
U.S. Treasury yields rose.
HOUSING COMPLETIONS DECLINE
Starts for housing projects with five units or more plunged 20.8% to a rate of 290,000 units, the lowest level since April 2020.
Overall housing starts plummeted 14.7%, the biggest drop since April 2020, to a rate of 1.321 million units in March.
Economists polled by Reuters had forecast starts would fall to a rate 1.487 million units.
Permits for future construction of single-family homes fell 5.7% to a rate of 973,000 units in March, the lowest level since last October.
That likely reflects the recent rise in mortgage rates and suggests slower homebuilding activity ahead.
Multi-family building permits were unchanged at a rate of 433,000 units.
Building permits as a whole dropped 4.3% to a rate of 1.458 million units, the lowest level since last July.
Economists expect housing made a small contribution to gross domestic product growth in the first quarter.
The fortunes of the housing market are seen tied to upcoming inflation data.
The number of houses approved for construction that were yet to be started rose 0.7% to 273,000 units in March.
The single-family homebuilding backlog was unchanged at 141,000 units.
The completion rate for that housing segment declined 10.5% to 947,000 units, suggesting that supply could remain low and keep prices elevated.
Overall housing completions decreased 13.5% to a rate of 1.469 million units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month over time to bridge the inventory gap.
Multi-family starts and permits surged in the aftermath of the pandemic, with the building backlog hitting record highs.
"With a typical 1.5-2-year time from start to completion, most of these units are being completed," said Alice Zheng, an economist at Citigroup.
"We should see less incoming multi-family supply, which could put pressure on housing prices."
While housing took a step back last month, manufacturing appears to be turning the corner.
These two sectors were the most impacted by the Fed's tighter monetary policy stance.
A separate report from the Fed on Tuesday showed production at factories increased 0.5% in March after rebounding by 1.2% in February.
Factory output edged down at a 0.1% annualized rate in the first quarter after contracting at a 0.9% pace in the October-December period.
"Manufactured output exits the first quarter at a high level relative to the quarterly average, which potentially sets the stage for a solid advance in output in the second quarter," said John Ryding, chief economic advisor at Brean Capital.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-s ... 024-04-16/