Macro Flash Report
Housing Sector
Takeaway:
The rebound in housing starts and the stability in building permits are encouraging signs for the residential construction sector, particularly given the persistent elevation of 30-year mortgage rates— a trend we expect to continue.
Housing Starts & Building Permits
In December, Housing Starts soared by 15.8% to an annualized rate of 1,499k units from 1,289k in November and surpassing the market expected 1,327k. This marks the highest month-over-month rate since March 2021 and the highest amount of starts since February 2024.
- The main driver of growth was multi-family projects surging (+58.9% to 418k), while single family starts ticked up (+3.3% to 1,050k).
Building Permits, a forward-looking indicator of construction activity, fell by -0.7% to an annualized rate of 1,483k in December, exceeding the forecasted 1,460k and down slightly from 1,493k in November.
- The slight downturn was mainly due to multi-family authorizations slipping (-5.8% to 437k), while single-family approvals rose (+1.6% to 992k).
The NAHB Housing Market Index, a gauge for single-family homebuilder sentiment, increased to 47 in January, above the anticipated dip to 45 from 46 in the previous two months. This marks the highest level since April 2024. The three indices were mixed:
- Current sales conditions rose (+3 to 51).
- Traffic of prospective buyers advanced (+2 to 33).
- Sales expectations in the next six months declined (-6 to 60), citing the elevated interest rate environment.