Homebuilders step up construction of single-family homes as 30-year mortgage rate eases below 7%
Homebuilders are stepping up construction of single-family homes following a steady decline in mortgage rates and broad expectation among economists that home loan borrowing costs will ease further next year
LOS ANGELES — Homebuilders are stepping up construction of single-family homes following a steady decline in mortgage rates and broad expectations among economists that home loan borrowing costs will ease further next year.
Builders broke ground on single-family homes in November at a seasonally adjusted annual rate of about 1.14 million units, the Commerce Department reported this week. That’s an 18% jump from October and a 42.2% increase from November last year. It also marks the fastest pace for single-family housing starts since April 2022.
Single-family housing starts have now risen three months in a row and are outpacing home completions for the first time since the spring of last year.
Even with November’s ramp-up, construction of single-family homes remains on pace for its second straight annual decline, with starts down 7.2% through the first 11 months of this year versus the same period in 2022.
Still, if mortgage rates continue to fall, that should spur more homebuyers to come off the sidelines and give builders more reason to accelerate construction next year.
Another incentive: The inventory of previously occupied homes for sale is likely to remain constrained because many homeowners have locked in a mortgage rate well below where rates are today.
Consider, some 67% of U.S. homeowners with a a mortgage have a 30-year fixed-rate home loan at 5% or less. Even with its recent decline, the average rate on a 30-year mortgage remains just under 7%, according to mortgage buyer Freddie Mac.
Several housing
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