Home builders expect home starts to rise by 5% in 2024

While home builder sentiment continues to decline into November, home builders are also expecting single-family housing starts to see a 5% bump in 2024, according to the National Association of Home Builders. Yahoo Finance takes a closer look at NAHB data, monitoring home builder stocks and discussing pressures on home pressures ahead of the new year.

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Video Transcript

BRAD SMITH: What we heard from homebuilders on Thursday, their sentiment declined for the fourth month in a row. But they showed some optimism for improved conditions in the coming months saying they expect a 5% increase for single-family starts in 2024 amid improving inflation data and the Fed holding rates here. Now, of course, a few things to continue to break down. And as I was mentioning, I'm continuing to track some of the homebuilder stocks out this morning.

PulteGroup, that's seeing fractional move to the upside. You're also seeing Lennar and Toll Brothers try to hold on to some of the small moves to the upside fractionally as they may be. Ultimately here, it's what price the consumer, the home buyers, the purchasers out there are comfortable with entering into a contract. And I think it's also important to note that even as we're listening into some of these earnings calls, important to pay attention to where you're actually seeing some of those contracts broken, even if there was a potential, kind of, purchase that was brought on and into the backlogs for some of these homebuilders, Toll Brothers, Lennar, KB Homes, the list goes on. But at the end of the day, that signals how much more different the actual financing environment is for many of these home purchases right now.

SEANA SMITH: Yeah, clearly, there's a lot of demand for housing starts, new homes to be built. Because if you're out there, if you're looking for a home, if you're looking for a single family, multifamily, there simply are not a lot of options out there on the market right now. So there clearly is, on the demand side, a need. Whether or not that's going to meet that demand, obviously, there remains a wide gap, right?

You just brought up a great point in terms of the lending environment right now costing homebuilders a bit more. That's keeping them-- keeping their ambitions at least in check just a bit. And when it comes to this data that we got out this morning, housing starts, building permits both surprising to the upside.

You couple that with the fact that the median price of an existing home is less than 5% below, that all time high relief and home prices or any expectation that we could see a relief in home prices appears a long ways away. We had that demand-- demand obviously waning just a bit. But supply being such a massive issue here and a large gap still remains in terms of what is needed to be on the market in order to put some more pressure on prices. And it seems like we're far ways away at least for right now, for that.