Surging Home Construction and Optimism Amid Falling Mortgage Rates

The annual pace of new home construction in the US surged in November, rising for the third consecutive month, driven by falling mortgage rates and a shortage of housing inventory. Housing starts jumped by 14.8% compared to the previous month, reaching the highest level since May. Single-family building activity was the main driver, with a 40% increase in new single-family homes under construction compared to a year ago. However, building permits ticked down by 2.5% in November. Despite the increase in construction, there is still a significant housing shortfall, leading to rising rents and home prices. Lower mortgage rates are expected to continue to boost affordability and meet pent-up demand, as existing homeowners are reluctant to sell due to their ultra-low mortgage rates.