Homes under construction in Tucson, Arizona, United States, on Tuesday, February 22, 2022. US new home sales slumped in January after a wave of buying at the end of 2021, suggesting that a jump in mortgage rates may start to dampen demand.
Rebecca Noble | bloomberg | Getty Images
Construction sentiment in the single-family housing market posted an unexpected gain in January, rising for the first time in 12 consecutive months. Economists expected a slight decline.
Sentiment rose four points to 35 on the National Association of Home Builders / Wells Fargo Housing Market Index. Anything less than 50 is still considered a negative sentiment. The scale reached 83 in January 2022.
“The low point for building sentiment in this cycle appears to have been hit in December, even as many builders continue to use a variety of incentives, including price cuts, to boost sales,” said Jerry Konter, president of the Board of Directors of NAHB and Homebuilders of Savannah. “. Georgia. “The uptick in construction sentiment also means that a low cycle for permits and starts is likely around the corner, and a rebound in homebuilding could occur later in 2023.”
All three components of the index posted gains in January: current sales conditions increased four points to 40, sales forecasts for the next six months increased two points to 37, and buyer action increased three points to 23.
Both builders and consumers are likely to respond to the recent drop in mortgage rates. The average interest rate on 30-year fixed mortgage contracts last peaked at 7.37% at the end of October, according to the Daily Mortgage News. It then fell during the month of December and settled at 6.17% on Tuesday.
“While NAHB expects a decrease in single-family starts this year compared to 2022, a turning point in the housing sector appears to lie ahead,” said Robert Dietz, chief economist at NAHB. “In the coming quarters, construction of single-family homes will pick up from cycle lows as mortgage rates are expected to trend lower and housing affordability strengthens.”
Noting that the state still has a structural housing deficit of 1.5 million units, Dietz said improving affordability should increase demand.
Scale home mortgage applications It rose sharply last week, according to the Mortgage Bankers Association. Unfortunately, the number of new listings on the market is down sharply from a year ago.