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The Optimistic Outlook for 2024

Steve Hasselbeck  |  July 2, 2024

Housing

The Optimistic Outlook for 2024

The Optimistic Outlook for 2024

  1. Builder Confidence: As of June 2024, builder confidence has waned slightly, declining to 43 (out of 100) from a reading of 45 in May. This marks the lowest reading reported for 2024 since December 2023 (when it was 31). High mortgage rates and elevated construction financing costs continue to put a damper on builder sentiment, impacting their outlook for the remainder of the year. Persistently high mortgage rates are keeping many prospective buyers on the sidelines, while builders also grapple with higher rates for construction and development loans, labor shortages, and a dearth of buildable lots.
  2. Housing Starts and Permits: In May 2024, the U.S. Census Bureau and HUD issued 1,491,000 building permits, with 897,000 specifically for single-family residential construction. While this is down 13.2% from May 2023, it’s up 4.8% from the prior month (April 2024). These permits serve as a leading indicator for the supply of new homes available in the next 8-12 months. Additionally, the National Association of Realtors forecasts an increase in single-family residential starts throughout 2024, aiming for 1,020,000 starts by Q2 2024.
  3. Mortgage Originations: Fannie Mae predicts total single-family mortgage originations to reach $1.98 trillion in 2024, up from $1.50 trillion in 2023. This growth reflects a positive trend in housing demand and financing.

Challenges and Opportunities

While the outlook remains cautiously optimistic, addressing supply constraints is critical. The ongoing housing deficit necessitates building more than 1.15 million single-family homes annually. Supply-side challenges, including labor shortages and material costs, continue to impact construction rates.  Until we see consistently more new construction and lower mortgage rates, home prices will continue to rise – the old Econ 101 supply and demand issue.

All is not doom and gloom as some headlines would have you believe.  Connect with me in the Chicagoland area to explore your options for buying and/or selling.

For further reading, explore these sources:

  • The Farnsworth Group: 2024 and 2025 Outlook for New Single Family Residential Construction
  • NAHB: Single-Family Starts Will Rise in 2024

Feel free to explore these links for more detailed information! 🏠

 


Work With Steve

Steve’s #1 objective is to serve his clients with professionalism and personal attention when dealing with what for many is their single largest investment. If you would like to discuss your options with a trusted real estate specialist, Steve Hasselbeck is ready to take your call!