Home builders are looking forward to a busy spring and summer. But it could take time for construction to ramp up.
January data for housing starts and permits, two government measures of the early stages of home building, is set for release on Friday at 8:30 a.m. ET. Economists expect housing starts, which measures the beginning of construction on a new unit, to be flat with the month prior, at a seasonally adjusted annual rate of 1.46 million, according to FactSet.
Permits, a forward-looking indicator that tracks units authorized for new construction, is estimated to increase 1.5%, to a seasonally adjusted annual rate of roughly 1.52 million.
New home sales in 2023 grew 4.2% from the year prior, despite a rise in mortgage rates that sent sales of previously-owned homes to a nearly 30-year low. Though new home sales gained, the earliest stages of new construction shrunk, with single-family housing starts dropping 6% from the year prior.
Single-family starts are set to grow about 5% this year, the National Association of Home Builders said Thursday. Its monthly index measuring industry sentiment rose in February to its highest level since August. Builders were particularly bullish on selling conditions later this year; an index component tracking their expectations in the next six months increased to its highest reading since June.
The reading comes as mortgage rates, one of the main inputs of housing costs, move higher on hotter-than-expected economic data released earlier this week. The average 30-year fixed mortgage rate this week was 6.77%, the highest since mid-December.
The year-to-date gain in the 10-year Treasury yield, a benchmark for mortgage rates, coupled with industry concerns about labor and lot availability, is a “reminder that the recovery will be bumpy as buyers remain sensitive to interest rate and construction cost changes,” Robert Dietz, the trade group’s chief economist, said in a statement.
Write to Shaina Mishkin at [email protected]
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