The 2024 housing market received a significant boost in February as new-home construction soared, signaling a potential recovery from the challenges posed by the pandemic. According to the Commerce Department, privately owned housing completions surged by nearly 20 percent last month compared to January, reaching over 1.7 million, with single-family properties experiencing a remarkable 20 percent increase to more than a million new homes.
Housing starts also saw a notable rebound, jumping by close to 11 percent to 1.5 million, with single-family properties leading the charge, up nearly 12 percent to 1.1 million units for February.
Economists attribute this uptick to the warming weather, particularly in the South and Midwest regions, which experienced record temperatures and drier conditions, fueling construction activity.
Yelena Maleyev, a senior economist at KPMG, highlighted the positive impact of weather conditions, stating, "Record temperatures in the Midwest and much drier conditions in both the Midwest and South contributed to construction activity during the month."
The multi-family segment also witnessed a rebound, with completions reaching 644,000, the highest recorded figure in half a century. Experts see this surge as a positive sign for the 2024 housing market, which has been facing a significant shortage of supply.
Bill Adams, chief economist for Comerica Bank, noted, "Now supply chains are functioning better and construction times are shortening." He also emphasized the role of increased construction in alleviating supply constraints, particularly in the single-family segment.
Despite challenges such as elevated mortgage rates and high prices, economists remain optimistic about the outlook for the housing market in 2024. Building permits for new-home construction were up by nearly 2 percent, suggesting further growth in the sector.
Nancy Vanden Houten, lead U.S. economist at Oxford Economics, expressed confidence in the trajectory of single-family construction, stating, "Single-family starts, where there is still a need for supply, will drive the gains in housing starts in 2024."
Looking ahead, as warmer weather approaches and mortgage rates are expected to decrease slightly, industry experts anticipate a surge in activity during the prime spring home-buying season.
"As we enter the prime spring home-buying season, and as rates are expected to fall slightly lower in the second half of the year, activity is expected to pick up even more," Maleyev said.
The latest data offers a glimmer of hope for both buyers and sellers, indicating a potential rebound in the housing market after a period of volatility and uncertainty.