Encouraging Future Outlook and Improved Mortgage Rates
Furthermore, permits for future construction of single-family homes demonstrated a 0.7% increase, reaching a pace of 976,000 units in November. To add to the optimism, the rate on the widely favored 30-year fixed mortgage averaged 6.95% last week, marking the lowest level since August, down from 7.03% in the prior week. Data from Freddie Mac, a mortgage finance agency, suggests a decline in the rate from a 23-year high of 7.79% in late October, which trails the downward movement of U.S. Treasury yields.
The Federal Reserve, in its latest economic projections, maintained interest rates, signaling the cessation of the historic tightening of monetary policy that has been ongoing for the past two years. Additionally, the Fed hinted at lower borrowing costs expected to take effect in 2024.
Boosting Builder Confidence and Rental Housing Supply
A recent survey highlighted a rebound in confidence among single-family builders, rising from an 11-month low in December. Alongside this surge in single-family homebuilding, projects involving housing units with five or more residences also experienced an increase of 8.9% to reach a rate of 404,000 units in November. The greater supply of rental housing is predicted to be a major contributing factor to lower inflation levels in the coming year.
The housing market in November witnessed an overall surge in housing starts, recording a significant 14.8% increase to reach a rate of 1.56 million units. Economists who participated in a Reuters poll had forecasted a decrease to a rate of 1.36 million units, compared to the previously reported 1.372 million units. This unexpected growth in housing starts indicates a promising market for the real estate sector.