Amid Slumping Sales & Sentiment, Housing Starts & Permits Jumped In December

It would appear that homebuilders are desperately hoping for a ‘Field of Dreams’ year…

After seeing existing home sales collapse in January (not driven by the winter storms), US Housing Starts and Building Permits rose dramatically more than expected in December (+6.2% MoM vs +1.1% exp and +4.3% MoM vs +0.4% MoM exp respectively)…

Additionally, Housing Starts rose as Home Builders confidence crumbled (and Future Sales expectations dropped)…

The surprise monthly surge lifted the SAAR totals for both housing sector data points to multi-month highs…

Breaking down the headline data shows that multi-family building permits and housing starts soared (+18.1% MoM and +10.1% MoM respectively) while Single-Family Building Permits tumbled 1.7% MoM while single-family starts rose for the 3rd straight month…

However, the pace of construction continues to decline on a year-over-year basis.

Growth in permit demand was most robust in the Northeast and West, two of the more volatile regions.

Finally, the inventory of new homes for sale remains a significant headwind for residential construction activity.

While mortgage rates have fallen, perhaps prompting the homebuilders to take advantage…

…the fact that rate-cut expectations have tumbled suggests they ‘they will not come’ anytime soon, no matter how much you build.