Market Reports and Updates - Build New Home Coach

Market Reports and Updates

Explore our most recent market report to gain valuable insights into current industry trends, market dynamics, and emerging opportunities.

Latest Updates

Lower Interest Rates Lift Builder Confidence

In January, the NAHB/Wells Fargo Housing Market Index (HMI) surged seven points to 44, fueled by a drop in mortgage rates below 7% over the past month. Lower interest rates improved housing affordability, enticing buyers back into the market. Builders anticipate single-family starts to grow in 2024, addressing inventory needs, but challenges with material costs and supply are expected.

Despite reduced mortgage rates, some builders continue to lower home prices to drive sales. In January, 31% of builders cut prices, down from 36% in the previous two months. The average price reduction remained at 6%, with 62% of builders offering sales incentives.

The HMI, reflecting builder perceptions, saw gains in current sales conditions (up seven points to 48), sales expectations for the next six months (up 12 points to 57), and traffic of prospective buyers (up five points to 29). Regional HMI scores showed positive trends.

NAHB Chief Economist Robert Dietz notes the positive impact of declining mortgage rates but warns of challenges in higher prices and potential shortages of lumber, lots, and labor as home building expands in 2024.

Best and Worst Cities for Gen Z Homebuyers

Gen Z, constituting 21% of the U.S. population, is emerging as a significant force in the housing market, with only 17% owning homes. Point2Homes analyzed 100 major cities, revealing that the Midwest and the South offer the most accessible markets for Gen Z buyers. Fort Wayne, Indiana, leads the list with a favorable home price-to-income ratio, low Gen Z unemployment, and a homeownership rate of 13.9%. Other favorable cities include Corpus Christi, Texas; Detroit; Laredo, Texas; and Memphis, Tennessee. Conversely, California dominates the least accessible markets, with Fremont, San Diego, and San Jose ranking as the top three challenging cities for Gen Z buyers.

Three Texas cities—Corpus Christi, Laredo, and Fort Worth—emerge as accessible due to home prices under $350,000 and a low percentage of homes sold above asking price. In contrast, New York City and its boroughs pose challenges for Gen Z due to high prices nearing or exceeding $1 million and limited inventory. Lexington, Kentucky; Richmond, Virginia; and Newark, New Jersey, also present difficulties for Gen Z buyers, with factors like low inventory, high unemployment, and low median household income contributing to their ranking as challenging markets.

Building Material Price Growth Slows: Insights from the Latest Producer Price Index (PPI) Report

The latest Producer Price Index (PPI) report indicates a significant slowdown in the growth of building material prices for residential construction. In 2023, the average price level of building materials rose by only 1.3%, a substantial drop from the 15% increase witnessed in 2022. Monthly increases in building material prices averaged 0.2% in 2023, showing a decline from 1.5% in 2021 and 0.7% in 2022.

Specifically, softwood lumber prices (seasonally adjusted) declined by 2.3% in December, marking the third consecutive decrease and a total drop of 14.5% since the peak in July 2023. Gypsum building materials experienced a 0.3% decline in December and a 2% decrease over the past 12 months. Ready-Mix Concrete (RMC) prices, after a 0.2% decline in November, saw an average increase of 11.2% in 2023. Steel mill products prices increased by 3.3% in December, the first rise since May, with an annual average decrease of 16.1% in 2023.

Despite the fluctuations, these trends suggest a notable moderation in building material price increases, offering some relief to the residential construction sector.