Housing Market: Builders Forge Ahead As Buyers Enter 'Acceptance Phase' On Rates

A flurry of new data is in and the housing market is flashing mixed signals from builders, buyers and analysts. Here’s what you need to know.

The Data: The Census Bureau and the Department of Housing and Urban Development December housing data released Friday was mixed with housing starts beating expectations while housing completions declined.?

Housing starts jumped 15.8% in December to a seasonally adjusted annual rate of 1.499 million, surpassing the estimate of 1.33 million and rising sharply from November's revised rate of 1.294 million. However, privately-owned housing units authorized by building permits in December declined 0.7% from November's rate of 1.493 million and fell 3.1% compared to December 2023.

Meanwhile, housing completions fell 4.8% in December to 1.544 million, potentially signaling that builders face challenges in finishing projects. Annual housing completions in 2024 rose 12.3% to 1.627 million.?

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According to data released Thursday from the National Association of Home Builders and Wells Fargo, U.S. homebuilders lowered their six-month outlook on prospective sales as buyers are discouraged by rising mortgage rates which crossed over the 7% mark last week. 

However, homebuilder sentiment rose in January on optimism about current sales and prospective buyer traffic. The survey also attributed the rise in sentiment to the anticipation of likely more favorable regulatory conditions under the incoming Trump administration.?

Expert Ideas: Analysts from JPMorgan said on Friday that the firm remains optimistic on housing spending, despite surging mortgage rates. 

The analysts view consumers as in the "acceptance phase" when it comes to interest rates and expect existing home sales to grind modestly higher, up from 40-year lows. 

"More specifically, we believe 30-year mortgage rates being in the high 6 range is ?okay,'" JPMorgan analysts wrote. 

Stocks To Watch: Investors can track the U.S. homebuilders and construction through the IShares U.S. Home Construction ETF (ITB) and the SPDR Series Trust SPDR Homebuilders ETF .

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