Analysts provided a mixed report card for the housing market with existing home sales and new home starts showing positive gains, even as homebuilder confidence diminished amid uncertainty about the near future.
Thursday’s existing single-family home sales report was a bit of a surprise, with closings up 4.2% in February from the previous month to a seasonally adjusted 4.3 million. Contracts to sell homes had fallen in the previous two months, so the National Association of Realtors, which released the data, assumed that actual sales would dip as well.
“That figure is much better than I anticipated,” NAR chief economist Lawrence Yun said of February’s upturn.
He said some of the divergence could be attributed to severe cold in much of the country in January, which might have caused a delay in closings.
The weather also contributed to a slow January for single-family housing starts, which bounced back 11.2% in February to a seasonally adjusted 1.5 million homes. Tuesday’s report by the U.S. Census Bureau and the Department of Housing and Urban Development noted that this is still 2.9% below the number of starts one year earlier.
Moreover, while starts were up, home completions were down 4% from January, the Census and HUD said. Meanwhile, Wells Fargo reported that single-family permits were flat for the second straight month.
Mortgage rates that remain close to 7% are a major factor in the uncertainty plaguing would-be homebuyers, as well as builders. The latter are also worried about unknowns related to U.S. government tariffs on imported materials pivotal to the trade such as lumber, steel and aluminum.
Builder confidence about current and future single-family home sales dropped in March to its lowest level in seven months, the National Association of Home Builders said in a report Monday. The NAHB said that it expects buyers to pay $9,200 more per house due to tariffs if they are implemented.
Buyer traffic to visit new homes for sale also fell in March, the NAHB said. On the plus side, mortgage rates dropped somewhat in recent weeks, reaching 6.67% on Thursday. That had some positive effects on buyer behavior.
“With mortgage rates at least stabilizing, we are already seeing more life in the market. Many buyers who had been waiting on the sidelines are now re-engaging, and we remain optimistic about home sales in 2025,” Bryan Havel, division president of Austin, Texas, for Tri Pointe Homes, said in a statement.