Single-Family Housing Sees Rebound in November 2024 in US

A report from the Commerce Department revealed a modest increase in permits for future single-family home construction, indicating that residential investment may not significantly contribute to economic growth in the fourth quarter.

Higher mortgage rates, despite the Federal Reserve's rate cuts, continue to limit the housing market. The situation could worsen due to proposed tariffs and the possible expulsion of undocumented immigrants by President-elect Donald Trump.

The Federal Reserve delivered its third consecutive rate cut, but reduced its projections for the following year to just two rate reductions, citing on-going economic resilience. Concerns also arose that some of Trump’s policies could lead to inflation.

Bradley Saunders, North America economist at Capital Economics, expressed a less optimistic outlook, noting that Trump's proposed trade and immigration policies might undermine homebuilders' supply capacity.

The Census Bureau reported a 6.4 per cent jump in single-family housing starts, reaching a seasonally adjusted annual rate of 1.011 million units. However, homebuilding faced challenges throughout the year, partly due to a severe shortage of existing homes for sale. Although the Federal Reserve began cutting rates in September, the 30-year fixed mortgage rate remained near 7 per cent, influenced by rising 10-year Treasury yields and inflation concerns linked to the incoming administration.

JPMorgan economist Abiel Reinhart suggested that limited room for mortgage rate cuts is expected, with Treasury strategists forecasting only a minor decrease in 10-year rates by the end of next year.

Concerns about reduced net immigration were also raised, with potential impacts on household growth and labour availability in the construction sector.

Stocks on Wall Street dropped following the Fed's rate projections, while the dollar strengthened against a basket of currencies, and US Treasury yields rose.