U.S. Home-Builder Confidence Improves in January on Declining Mortgage Rates
17 January 2024 - 3:29PM
Dow Jones News
By Ed Frankl
Confidence among U.S. home builders improved for the
second-straight month in January, as mortgage rates fell on
accelerating expectations for interest-rate cuts, according to a
report from the National Association for Home Builders released
Wednesday. Here are the report's main takeaways:
--The NAHB's housing-market index, in conjunction with Wells
Fargo, a gauge of builder confidence in the market for
single-family housing, rose to 44 in January from 37 in December.
The improving sentiment closely tracks with a period of falling
interest-rate expectations, NAHB said.
--The reading was a better than the 39 expected by economists,
according to a poll compiled by The Wall Street Journal.
--"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 NAHB Chairman Alicia Huey, a custom home builder and
developer from Birmingham, Ala.
--Mortgage rates have decreased by more than 110 basis points
since late October per Freddie Mac, according to NAHB Chief
Economist Robert Dietz. "As home building expands in 2024, the
market will see growing supply-side challenges in the form of
higher prices and/or shortages of lumber, lots and labor," he
said.
--In January, 31% of builders reported cutting home prices, the
lowest rate since last August, down from 36% in the previous two
months. The average price reduction in January remained at 6%,
unchanged from the previous month. Meanwhile, 62% of builders
provided sales incentives of all forms in January, nearly stable
from between 60% and 62% since October.
--All three major components of the housing-market index rose in
January: the index gauging current sales conditions rose seven
points to 48; the measure of sales expectations in the next six
months climbed 12 points to 57; while the component for the traffic
of prospective buyers ticked up five points to 29.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
January 17, 2024 10:14 ET (15:14 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.