Macro Deep Dive Report

Housing Refresh

Takeaway: The housing market should continue holding up better than expectations in the first half of the year. After a steady decline in mortgage rates over the last two months of 2023, we have seen improved sentiment and sales in the housing sector while the permits/starts pipeline remains stable.

Housing starts and Building permits in January both failed to meet expectations down to 1,331k versus 1,460k, and 1,489 versus 1512k, respectively. However, while this tranche of data disappointed, the underlying trend for permits continues to hold up, suggesting that there is still optimism in the sector. Both also remain above their respective 2019 level (dotted), clearly showing that demand for housing remains robust given affordability headwinds

New home sales were up 1.5% in January, below expectations of a 3% monthly gain. This was the second monthly increase in a row, bouncing off November’s 11- month low.

Existing home sales came in better than expectations, up to 4m units sold versus an expectation of 3.7m. While existing home inventories remain depressed, sales have been improving since October.

The steady decline in the 30yr Fixed Mortgage Rate from November and December clearly brought buyers back to the market, with an overall increase in both new and existing home sales (below). Furthermore, this has also led to a steady improvement in the National Association of Home Builders (NAHB) sentiment survey which has been improving since November.

Building Permits, & Housing Starts

New, & Existing Home Sales (SAAR)