All the financial stress of the past few months has built up to this.
In November, construction began on the annualized equivalent of 1.6 million US housing units, and new permits were submitted on 1.5 million units. The latter rose year-over-year for the first time since July 2022, suggesting homebuilders are excited about conditions conspiring to bring customers back into the market.
Housing began to fall roughly when the Federal Reserve interest rates began to rise. Shelter inflation, one of the biggest and toughest sources of rising prices nationwide, start coming down as high interest rates have discouraged homebuyers from diving into a market that has become much more expensive during the pandemic. But now that the market is bank on those rates to come next year off, mortgage rates also began to fall.
“Lower interest rates and a lack of resale inventory helped provide a strong boost to new home construction in November,” said Alicia Huey, president of the National Association of Home Builders (NAHB) and a developer from Birmingham, Alabama. a statement about the figures.
The NAHB also took notice yesterday (Dec. 18) that industry excitement rose slightly in November for the first time since July, when the interest rate picture was much less certain.
“If the Fed is going to start to actually cut rates, we believe that pent-up demand will be activated, and we will be well prepared,” Stuart Miller, chief executive officer of homebuilder Lennar, said last Friday during an earnings call with investors said (December 15).
Money in the ceiling
Owning a home in the US is often a primary store and builder of household wealth, so if one assumes that home prices always rise – which they certainly don’t– then more houses being built lead to more new vectors for Americans to get richer. On the other hand, the combination of economic security and home ownership means that about a third of the population is excluded from whatever wealth effects comes from increased house prices.
Plus, when the home building industry slows down, it takes approx 15% of the US economy down with it. That’s not to mention all the effects of people buy fewer couches and TVs to settle into their new rooms.