Finance News
Housing starts in the US saw a significant increase, the largest since May, following a sharp decline.
Housing Starts in the US Rebound Sharply Following Steep Decline, Marking Largest Increase Since May,
The latest data on new US home construction shows a significant rebound in February, following a period of weakness due to adverse weather conditions at the beginning of the year. This uptick in construction activity can be attributed to slightly improved mortgage rates and a shortage of existing homes for sale in the market.
According to government data released on Tuesday, residential starts surged by 10.7% to a seasonally adjusted annual rate of 1.52 million, marking the largest increase since May. Economists had expected a pace of 1.44 million, making this report even more impressive. Additionally, building permits, which serve as a gauge for future construction, also rose to a rate of 1.52 million, the highest since August. Both permits and starts figures for January were revised upwards.
Notably, single-family home construction reached a two-year high, while multifamily home starts rebounded by 8.3% following a sharp decline in the previous month. This positive trend in construction activity suggests that the housing market is gradually recovering, as builders capitalize on limited resale inventory.
Looking ahead, experts anticipate a potential retreat in home financing costs later in the year, especially if the Federal Reserve decides to reduce interest rates. This could further stimulate demand from potential homebuyers, providing a significant boost to the industry.
In conclusion, the recent surge in home construction activity indicates a positive trajectory for the housing market. With improving builder sentiment and growing demand, the sector is poised for continued growth in the coming months.
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FAQ:
Q: Which regions saw the most significant increase in housing starts?
A: The Midwest experienced a sharp rebound in housing starts following a winter weather-related plunge, while construction in the South reached its fastest annual pace in nearly two years.
Q: What incentives are homebuilders offering to attract buyers?
A: Homebuilders may offer incentives such as variable-rate mortgages at below-market rates to entice buyers and stimulate demand in the housing market.
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The housing inventory shortage that has been plaguing the U.S. for years appears to finally be easing, but a significant factor behind what is driving up supply provides little encouragement that the stagnant market will get moving again anytime soon.
A new report from Redfin says the number of homes for sale jumped to a four-year high in November, surging 12.1% year over year. But the major reason for the increase is that most homes on the market just aren’t selling.
Redfin data shows housing supply hit a four-year high in November, but mostly because a majority of houses for sale have sat on the market for more than two months. ( Liu Guanguan/China News Service/VCG via Getty Images / Getty Images)
More than half (54.5%) of homes on the market last month had been listed for more than 60 days, with many deemed too expensive by would-be buyers. According to Redfin data, that is up 49.9% from a year ago, and is the highest share of stale inventory for a November since 2019.
The report said that the typical home that went under contract last month did so in 43 days, which is also the slowest November pace since 2019.
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“A lot of listings on the market are either stale or uninhabitable. There’s a lot of inventory, but it doesn’t feel like enough,” said Meme Loggins, a Redfin Premier real estate agent in Portland, Oregon.
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“I explain to sellers that their house will sit on the market if it’s not fairly priced,” Loggins said. “Homes that are priced well and in good condition are flying off the market in three to five days, but homes that are overpriced can sit for over three months.”
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The data shows Texas and Florida have the highest rates of old listings on the market. Miami has the greatest share of homes on the market for longer than 60 days than any other major metro at 63.8%, followed by Austin, which has 62.4% of listings that have sat for more than two months without going under contract.
The affordability crisis has led to the majority of the homes on the market sitting unsold for more than 60 days. (Fox News)
The housing market saw a flurry of activity driven by high demand during the pandemic, but has become stagnant as soaring home prices and mortgage rates have led to an ongoing affordability crisis that has pushed homeownership out of reach for many Americans.
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Housing costs repeatedly broke records in 2024, and a report from the National Association of Realtors’ (NAR) annual survey of buyers and sellers found the share of first-time homebuyers dropped from 32% in 2023 to 24% in 2024, the lowest share since NAR began collecting data in 1981.
FOX Business’ Lindsay Kornick contributed to this report.
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