Data released today showed that housing starts tumbled 11% in December. Analysts at Wells Fargo point out that with mortgage rates now lower, sales and starts are poised for a rebound.
Key Quotes:
“December’s astonishingly weak housing starts data confirm many of the fears builders voiced late last year. The NAHB/Wells Fargo Homebuilders’ Survey plunged eight points in November and another four points in December amid fears the Federal Reserve was poised to continue hiking short-term interest rates.”
“The December data show just how extensive the damage to the housing market has been. December’s 11.2% drop in overall starts marked the third decline in the past four months and was the largest monthly decline since June.”
“The four-month string of declines in single-family starts, which was accurately depicted by the monthly homebuilders’ survey, provided a much-needed wake-up call for the Fed and was likely one of the key factors influencing its decision to put any further interest rate hikes on hold.”
“Mortgage rates have fallen half a percentage point since Fed Chairman Powell’s acknowledgement earlier this year that the Fed will now be a little more patient in raising interest rates back to what they believe is a neutral level. In the wake of that announcement, the homebuilders’ survey rebounded in January and February and buyer traffic and mortgage applications have both risen off their December lows. We are not looking for particularly big things from the housing sector in 2019, but an ending to the slide that began last spring would provide a great deal of resilience to an expansion that looked uncomfortably precarious at the end of 2018.”
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