Macro Flash Report

Housing Market

Takeaway: November’s starts and permits data provide an encouraging signal for the future, while current activity remains somewhat restrained. The rosy outlook is especially encouraging, considering that mortgage rates remain at the higher end of their range over the past six months.

In November, Housing Starts dropped by -1.8% to an annualized rate of 1,289k units from 1,312k in October and missing the market expected rise to 1,350k. This marks the lowest reading since July and the fourth consecutive month of declines.

• The downturn was mainly driven by multi-family projects plummeting (-24.1% to 264k), which offset the gain in single-family units (+6.4% to 1,011k).
• Notably, starts in the South rose (+10.2% to 727k), after a -9.2% decrease in October, signaling recovery after the negative impacts due to the hurricanes.

Building Permits, a forward-looking indicator of construction activity, surged by 6.1% to an annualized rate of 1,505k units, rebounding from the -0.4% decline in October and surpassing the forecasted 1,430k. Marking the sharpest increase since February 2023, pushing permits to their highest annualized level since February 2024.

• Multi-family authorizations were the main driver of growth (+22.1 to 481k), followed by single-family approvals (+0.1% to 972k).
• Permits increased in all regions.

The NAHB Housing Market Index, a gauge for single-family homebuilder sentiment, held steady at 46 in December, slightly below the anticipated tick up to 47. This comes as the renewed hope about better regulatory business conditions was dimmed by high home prices and mortgage rates. The three indices were mixed:

• Current sales conditions remained unchanged at 48.
• Sales expectations in the next six months rose by 3 points to 66, the highest since April 2022.
• Traffic of prospective buyers fell by 1 point to 31.