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Homebuilder sentiment increases by most in nearly a year U.S. homebuilder sentiment climbed January by the most in nearly a year as lower mortgage rates boosted customer traffic, sales and the demand outlook. The National Association of Home Builders/Wells Fargo gauge of housing market conditions increased seven points to 44, according to data out Wednesday. The January figure exceeded all estimates in a Bloomberg survey of economists. A drop in mortgage rates from an October peak near 8% is helping to thaw the housing market. Even with the strong advance to start 2024, the index is still well below pre-pandemic levels, suggesting momentum may be slow to build with borrowing costs still twice as high as they were two years ago. "Lower interest rates improved housing affordability conditions this past month, bringing some buyers back into the market after being sidelined in the fall," Alicia Huey, chair of the NAHB, said in a statement. "Single-family starts are expected to grow in 2024, adding much needed inventory to the market." The group's measure of expected sales increased 12 points, the most since June 2020, while the gauges of prospective buyer traffic and current sales both rose to four-month highs. Builder sentiment improved in three of four regions, led by sizable advances in the South and West. With rates below 7%, some builders are stepping back from price cuts. This month, 31% of builders reported lowering prices, the smallest share since August. The average reduction held at 6%, according to the report. At the same time, many are offering incentives to prospective buyers. Some 62% indicated they provided some form of incentive, in line with the share in recent months. Continue reading... https://lnkd.in/gtSvSi-E

Homebuilder sentiment improves for second straight month, following drop in mortgage rates Homebuilder sentiment improved in January, jumping 7 points to 44 on the National Association of Home Builders monthly index. Anything below 50 is still considered negative, but the index has now moved 10 points higher in the last two months. Sentiment is now at the highest level since September. The increase coincides with a big drop in mortgage interest rates from around 8% in mid-October to the 6% range in December. Builders point squarely to that, and the effect on affordability, for growing confidence. “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 Alicia Huey, NAHB chairman and a custom home builder and developer from Birmingham, Alabama. “Single-family starts are expected to grow in 2024, adding much needed inventory to the market. However, builders will face growing challenges with building material cost and availability, as well as lot supply.” Of the index’s three components, current sales conditions increased 7 points to 48, sales expectations in the next six months jumped 12 points to 57 and buyer traffic rose 5 points to 29. Regionally, on a three-month moving average, builder confidence increased the most in the Northeast, the only area now in positive territory at 55. Sentiment was flat in the Midwest and rose slightly in the South and West.

2023 marked a significant slowdown in home sales throughout the Austin area--the most sluggish period in over 10 years. Various factors contributed to this deceleration, with a primary driver being a succession of Federal Reserve-induced mortgage rate hikes. Between March 2022 and December 2023, the Federal Reserve implemented 11 interest rate increases, casting a shadow over market activities. However, a pivotal shift in the scenario unfolded after the December Federal Reserve meeting, where the board indicated a change in policy. This announcement triggered a rally in both bond and stock markets as the holiday season approached. Notably, the projected 30-year fixed mortgage rate dipped below 7%, marking the first time in nearly 12 months. What follows is a growing comfort among both institutional and private investors with the Federal Reserve's strategy. The market is reflecting this newfound confidence by factoring in the potential for three to four rate cuts in 2024. The evolving landscape suggests a re-calibration of expectations and strategies, with a more optimistic outlook for the real estate and mortgage markets in the coming year. However, this optimism is predicated on mortgage rates declining in 2024 so something we will continue to monitor closely.The statistics in this newsletter are for single-family homes, condos, and town homes in the city of Austin. If you are interested in statistics for a specific area, property type or price range, please let me know and I can help you with that.

From Chartr: 1/31/24 Realty check With mortgage rates and house prices both somewhat inexplicably rising in recent years, the US housing market has been frozen. Owners haven’t been looking to remortgage at higher rates, and would-be buyers have struggled to make offers in one of the most unaffordable markets on record, sending home sales to their lowest levels in 28 years. But, national price statistics tell only one part of the story, as the US isn’t just one market: it’s thousands. The Home Value Index, released by online real estate marketplace Zillow, reports data on the value of a typical home across more than 3,000 US counties. Zillow’s index found that home prices rose 3.2% between Dec ‘22 and Dec ‘23, as the post-Covid housing bubble in Texas and other Southern states burst and competitive areas in the Northeast and Florida heated up. Indeed, if you’ve ever wanted to move to Austin, now might be the time, with prices reportedly down ~20% from their 2022 peak. Looking ahead, Zillow expects a similar hike in house prices this year, forecasting a 3.5% rise. Thawing out Despite rising house prices, however, there are some more recent signs of movement in the market. Redfin data showed that mortgage-purchase applications were up 8% this January from the end of last year, and the National Association of Realtors also reported that pending home sales climbed 8.3% month-over-month in December — the biggest increase since June 2020 — as higher consumer confidence and slightly lower mortgage rates begin to ripple through the housing market.

"Market News- Builder sentiment dropped six points to 50 in August, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Anything over 50 is considered positive. Mortgage rates are now holding solidly over 7%, hitting 7.24% Monday, according to Mortgage News Daily. Rising mortgage rates are hitting potential homebuyers hard, and that is taking steam out of the homebuilding market. “Rising mortgage rates and high construction costs stemming from a dearth of construction workers, a lack of buildable lots and ongoing shortages of distribution transformers put a chill on builder sentiment in August,” said Alicia Huey, National Association of Home Builders chair and a homebuilder and developer. “Declining customer traffic is a reminder of the larger challenge that shelter inflation is up 7.7% from a year ago and accounted for a striking 90% of the July Consumer Price Index reading of 3.2%,” said Robert Dietz, National Association of Home Builders’s chief economist, who added that the market currently has a shortfall nationwide of about 1.5 million housing units." #marketnews #homebuilders

The Q1 2024 Fannie Mae Home Price Expectations Survey reveals an upgraded outlook for home price growth, with experts forecasting higher annual increases driven by ongoing housing supply constraints and expectations of lower mortgage rates. Home Price Growth Outlook: ● A panel of housing experts forecasts annual national home price growth of 3.8% in 2024 and 3.4% in 2025, as per the Q1 2024 Fannie Mae Home Price Expectations Survey (HPES). ● These estimates represent an increase from last quarter's expectations of 2.4% for 2024 and 2.7% for 2025. Factors Driving Upward Revision: ● An increased share of panelists (41% in Q1 2024 compared to 26% in Q4 2023) indicated higher upside risk to their home price forecasts. ● The majority of the panel cited ongoing housing supply constraints and lower mortgage rates as the basis for their upward revisions. Expected Mortgage Rates: ● The panel anticipates a median 30-year fixed mortgage rate of 6% by the end of 2024. Market Insights: ● Fannie Mae Vice President of Economics, Hamilton Fout, highlighted the potential support for continued home price growth if mortgage rates move towards the predicted median rate of six percent by the end of 2024, given persistent supply-side challenges. ● Terry Loebs, founder of Pulsenomics, emphasized the positive outlook for existing homeowners but noted the enduring affordability concerns for prospective buyers amidst a scarcity of listings.

NATIONAL ASSOCIATION OF HOME BUILDERS HOUSING MARKET INDEX, November 2023 Homebuilder Sentiment Fell Again In November, 2024 Mortgage rates are near their highest levels in more than two decades and it once again further weighed on home builder confidence. • The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) fell to 34 in November, lower than economists expected. • This is the fourth consecutive month of declines. • Economists at the NAHB see conditions improving, forecasting a drop in mortgage rates to around 7.5% and a 5% rise in single-family housing starts in 2023. • High mortgage rates prompted 36% of builders to cut prices on homes in November, its highest level in a year. COMMENTS “While builder sentiment was down again in November, recent macroeconomic data point to improving conditions for home construction in the coming months,” NAHB CHIEF ECONOMIST ROBERT DIETZ . “Given the lack of existing home inventory, somewhat lower mortgage rates will price-in housing demand and likely set the stage for improved builder views of market conditions in December." "The rise in interest rates since the end of August has dampened builder views of market conditions, as a large number of prospective buyers were priced out of the market,” NAHB CHAIR ALICIA HUEY. #homebuildersentiment

*EXISTING HOME SALES, September 2023, National Association of Realtors; Reuters U.S. EXISTING HOME SALES dropped to a 13-year low in September as surging mortgage rates and tight supply combined to reduce affordability for many first-time buyers. EXISTING HOME SALES fell 2.0% last month to a seasonally adjusted annual rate of 3.96 million units, the lowest level since October 2010. Sales dropped 1.1% in the South and decreased 4.1% in the Midwest. Sales rose 4.2% in the Northeast and slumped 5.3% in the West. HOME RESALES, which account for a big chunk of U.S. housing sales, declined 15.4% on a year-on-year basis in September. "As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales," said NAR CHIEF ECONOMIST LAWRENCE YUN. "Higher mortgage rates are really hampering activity." *Existing Home Sales are counted at the closing of a contract and last month's sales likely reflected contracts signed in August, when the rate on the popular 30-year fixed mortgage vaulted above 7%. #ExistingHomeSales

Pending home sales were down significantly in August, much lower than analysts' expectations. It's apparent now that the housing market has cooled significantly. Expect all but the most serious buyers to be quietly waiting on the sidelines for mortgage rates to drop. https://lnkd.in/gKNU4CDi

Builders rediscover a tool from the 1980s that keeps new home prices from falling: While sellers of existing homes have struggled with rising rates and softening demand, homebuilders have not only survived, but thrived in this market thanks to the use of mortgage rate buydowns. https://lnkd.in/g9Ns3THw #Phoenixrealestate #Arizonahomes #AZrealestate