With the ongoing government shutdown, data on December housing starts and new home sales will likely be delayed. According to analyst reports, single-family housing starts were likely down by around 15% year over year in December on top of a 13% decline in November. Looking at the data available for 2018, single-family housing starts increased by less than 30,000 units from 2017 to 879,000 units, or around 4%. The first half of 2018 saw a year-over-year increase of 7-8%, but growth slowed in the second half as the sharp run-up in interest rates made housing less affordable. The decline in single-family housing starts in November was widespread, with the largest decline in the West region.
Homebuilders are looking at possible changes to make new homes more affordable. KB Homes, for example, mentioned on its earnings call that it is looking to reduce the level of specification and offer more smaller homes for sale, which are expected to cost $10,000 less (or around $50 a month). In addition, a 50 basis-point decline in mortgage rates since mid-November has reduced the monthly payment by around $70 a month on a $240,000 home. These changes will likely be positive for housing starts and new home sales.
Disclaimer: Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Genworth Mortgage Insurance and are subject to change without notice. Genworth Mortgage Insurance has no obligation to provide revised assessments and assumes no duty to update information in the event of changed circumstances. While we have gathered this information from sources believed to be reliable, Genworth Mortgage Insurance cannot guarantee the accuracy of the information provided. Certain data discussed in this report is publicly available only on a time delayed basis. Genworth Mortgage Insurance strives to analyze data as it becomes available, but makes no representation that all data is reviewed immediately upon release.