Dec 06 2024 6 mins 1
The US housing industry is experiencing a mix of cautious optimism and ongoing evolution as it enters the final quarter of 2024. Recent market movements indicate a shift in dynamics, driven by changes in mortgage rates, inventory levels, and regulatory updates.
According to the S&P CoreLogic Case-Shiller Index, US home prices have seen a 4.25% year-on-year increase in seasonally adjusted terms[1]. However, housing permits and starts have declined, with permits falling by 17.9% and starts dropping by 18.4% year-on-year, based on US Census Bureau figures. In contrast, housing completions have risen by 12.8% year-on-year to a seasonally-adjusted annual rate of 1,557,000 units[1].
The spring selling season in 2024 began with mortgage interest rates dipping below 7% for the first time since May 2023, and the Federal Reserve has announced plans to cut its key interest rates three times this year[3]. This has led to a mix of cautious optimism and a wait-and-see approach among sellers, who are hesitant to sell at current rates but recognize that rates may never return to the lows of 2021.
Chief Economist Lawrence Yun of the National Association of Realtors noted that there is a large degree of pent-up demand and delayed sellers who are waiting for life-changing circumstances or lower interest rates to put their homes on the market[3]. BrightMLS predicts a 7.6% increase in inventory by the end of 2024, driven by these "life happens" factors.
Regulatory changes are also shaping the industry. The US Department of Housing and Urban Development (HUD) has updated the Manufactured Home Construction and Safety Standards, known as the HUD Code, to increase innovation and production of affordable manufactured homes[4]. The updates allow for multi-unit single-family manufactured homes to be built under the HUD Code for the first time, extending the cost-saving benefits of manufactured housing to denser urban and suburban areas.
In terms of consumer behavior, there is a growing focus on affordability and accessibility. The affordable housing industry is poised for transformative opportunities in 2024, with stakeholders encouraged to monitor and engage with policies that support affordable housing development[2]. Public-private partnerships, innovative financing models, and technology are being leveraged to address housing challenges and increase accessibility.
Industry leaders are responding to current challenges by embracing these changes and prioritizing sustainability and inclusivity. For example, HUD's updates to the HUD Code aim to increase production while ensuring modern designs that suit the needs of families[4].
Compared to the previous reporting period, the US housing industry is seeing a shift towards more cautious optimism, driven by changes in mortgage rates and regulatory updates. The industry is poised for growth and innovation, particularly in the affordable housing sector, as stakeholders work to address housing challenges and increase accessibility.
According to the S&P CoreLogic Case-Shiller Index, US home prices have seen a 4.25% year-on-year increase in seasonally adjusted terms[1]. However, housing permits and starts have declined, with permits falling by 17.9% and starts dropping by 18.4% year-on-year, based on US Census Bureau figures. In contrast, housing completions have risen by 12.8% year-on-year to a seasonally-adjusted annual rate of 1,557,000 units[1].
The spring selling season in 2024 began with mortgage interest rates dipping below 7% for the first time since May 2023, and the Federal Reserve has announced plans to cut its key interest rates three times this year[3]. This has led to a mix of cautious optimism and a wait-and-see approach among sellers, who are hesitant to sell at current rates but recognize that rates may never return to the lows of 2021.
Chief Economist Lawrence Yun of the National Association of Realtors noted that there is a large degree of pent-up demand and delayed sellers who are waiting for life-changing circumstances or lower interest rates to put their homes on the market[3]. BrightMLS predicts a 7.6% increase in inventory by the end of 2024, driven by these "life happens" factors.
Regulatory changes are also shaping the industry. The US Department of Housing and Urban Development (HUD) has updated the Manufactured Home Construction and Safety Standards, known as the HUD Code, to increase innovation and production of affordable manufactured homes[4]. The updates allow for multi-unit single-family manufactured homes to be built under the HUD Code for the first time, extending the cost-saving benefits of manufactured housing to denser urban and suburban areas.
In terms of consumer behavior, there is a growing focus on affordability and accessibility. The affordable housing industry is poised for transformative opportunities in 2024, with stakeholders encouraged to monitor and engage with policies that support affordable housing development[2]. Public-private partnerships, innovative financing models, and technology are being leveraged to address housing challenges and increase accessibility.
Industry leaders are responding to current challenges by embracing these changes and prioritizing sustainability and inclusivity. For example, HUD's updates to the HUD Code aim to increase production while ensuring modern designs that suit the needs of families[4].
Compared to the previous reporting period, the US housing industry is seeing a shift towards more cautious optimism, driven by changes in mortgage rates and regulatory updates. The industry is poised for growth and innovation, particularly in the affordable housing sector, as stakeholders work to address housing challenges and increase accessibility.
