U.S. HOME-BUILDER CONFIDENCE IMPROVES IN JANUARY ON DECLINING MORTGAGE RATES
17 January 2024, 17:00, By Ed Frankl
Confidence among U.S. home builders improved for the second-straight month in January, as mortgage rates fell on accelerating expectations for interest-rate cuts, according to a report from the National Association for Home Builders released Wednesday. Here are the report's main takeaways:
--The NAHB's housing-market index, in conjunction with Wells Fargo, a gauge of builder confidence in the market for single-family housing, rose to 44 in January from 37 in December. The improving sentiment closely tracks with a period of falling interest-rate expectations, NAHB said.
--The reading was a better than the 39 expected by economists, according to a poll compiled by The Wall Street Journal.
--"Lower interest rates improved housing affordability conditions this past month, bringing some buyers back into the market after being sidelined in the fall by higher borrowing costs," said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala.
--Mortgage rates have decreased by more than 110 basis points since late October per Freddie Mac, according to NAHB Chief Economist Robert Dietz. "As home building expands in 2024, the market will see growing supply-side challenges in the form of higher prices and/or shortages of lumber, lots and labor," he said.
--In January, 31% of builders reported cutting home prices, the lowest rate since last August, down from 36% in the previous two months. The average price reduction in January remained at 6%, unchanged from the previous month. Meanwhile, 62% of builders provided sales incentives of all forms in January, nearly stable from between 60% and 62% since October.
--All three major components of the housing-market index rose in January: the index gauging current sales conditions rose seven points to 48; the measure of sales expectations in the next six months climbed 12 points to 57; while the component for the traffic of prospective buyers ticked up five points to 29.
Write to Ed Frankl at
edward.frankl@wsj.com (END) Dow Jones Newswires January 17, 2024 10:00 ET (15:00 GMT) Copyright (c) 2024 Dow Jones & Company, Inc.