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Industry & Trends

Multiple Signs Point to Good News for Housing Market

We’re still not back to the good old days in the housing business but a number of indicators are presenting good news going forward.

It’s been a tough stretch for the housing business—and the people who build houses—but recent news from several directions suggests things are continuing to look up as the sector rebounds. 

New data on housing starts as well as a dramatic increase in new mortgage applications—key measures of buyer optimism—are two leading indicators but so too is a robust financial quarter from one of the nation’s largest home builders.

It’s the latest U.S. Census Bureau numbers from February on single-family housing starts that might be the most encouraging. The bureau said starts for those type of homes rose 11.6% for the month to a rate of 1.13 million. That’s 10.7% above the revised January estimate and almost 6% over the February 2023 rate of starts. The rate for February of multi-unit starts (five or more) was 377,000 units. Together these represent some of the strongest numbers the industry has seen since interest rates began to climb in 2022. 

Coupled with this positive news was the report from the Mortgage Bankers Association that mortgage applications for new home purchases increased 15.7% year-over-year in February. This came as rates for new mortgages stubbornly have refused to decline and have even gone up slightly since the start of the year. 

“New-home purchase activity in February was slightly hampered by the rise in mortgage rates over the month,” said Joel Kan, MBA’s vice president and deputy chief economist. “However, home buyers kept their demand despite how competitive the purchase market still is.”

One more piece of good news came from the latest financial quarter for Lennar, one of the country’s largest home builders. For its fiscal first quarter the company said orders for new homes jumped 28% while it delivered 23% more homes than it did a year ago. Lennar said it drove these strong results with increased sales incentives but also forecast continued improvements for its second quarter, which would allow it to hit its goal for the year of a 10% growth in its revenues. 

“Although affordability continued to be tested by interest rate movements, purchasers remained responsive to increased sales incentives,” executive chairman and co-CEO Stuart Miller said.

Taken together these positive signs offer promise that the home building bust has bottomed out and the industry will continue to improve throughout 2024. 

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