Industry Focus >>New Housing Starts andExpectation in 2023-2024: USA
2023-2024新屋開工和預測: 美國
The U.S. housing market in 2023 presented a story of resilience
amidst challenges. After a period of rapid growth fuelled by historically
low mortgage rates, new housing starts experienced a period offluctuation. This article analyzes the key trends of 2023 and explores
the expectations for the housing market in 2024.

significant drop in January 2024, marking the lowest level
since August 2020. This 14.8% month-over-month decline
surprised analysts and signalled a potential correction in themarket.

Factors Influencing the Slowdown

Hardware & Fastener Components - no.62/2024

2023: A Year of Mixed Signals
The year began with a sense of cautious optimism. While builder
confidence, as measured by the National Association of Home Builders(NAHB) Housing Market Index (HMI), had dipped to 44 in December
2022, it rose steadily in the first half of 2023. By June 2023, the HMI
reached 55, exceeding pre-pandemic levels observed in September
2020 (at 51). This significant improvement suggests a cautiously
optimistic outlook among builders, despite ongoing market challenges.
Note that: Builder confidence reflects how optimistic home builders
are about the housing market. They consider factors like buyer demand,affordability, and construction costs. The NAHB Housing Market
Index (HMI) is a survey that gauges this confidence, with a score above
50 indicating a positive outlook. High builder confidence leads to more
new construction projects and a stable market. It's important because it
influences housing inventory and overall market health.
However, a key indicator, building permits, painted a more complex
picture. Though May 2023 saw a 4.8% increase from the previous
month, it still represented a 13.2% decline compared to May 2022.
This suggested a potential slowdown in new construction activity. The
second half of 2023 witnessed a more pronounced slowdown in
new housing starts. Data from the U.S. Census Bureau revealed a076 惠達雜誌

Several factors contributed to the slowdown in new housing
starts in 2023:• Rising Mortgage Rates: A significant factor was the risein mortgage rates. After years of historically low rates, the30-year fixed mortgage rate climbed above 7.79% in 2023,
significantly impacting affordability for potential buyers.
This squeezed buyer budgets and led to a decrease indemand for new homes.
• Supply Chain Issues: The ongoing global supply chain
disruptions continued to affect the housing industry.
Shortages of building materials and labour hampered
construction activity, causing delays and pushing up
construction costs.
• Inflation: Broader inflationary pressures also played a role.
The rising costs of materials and labor further squeezedbuilder margins and contributed to a more cautious
approach to new construction projects.

Signs of a Potential Rebound in 2024
Despite the challenges of 2023, there are reasons forcautious optimism in 2024. Here are some key trends to watch:Copyright owned by Fastener World
Article by Dr. Sharareh Shahidi Hamedani, UNITAR International University• Stable Builder Confidence: Though not at pre-pandemic
levels, builder confidence has remained relatively stablecompared to the lows of 2022. This indicates that builders
are not overly pessimistic about the market's long-term
prospects.
• Underlying Housing Demand: Demographics continue topoint towards a sustained demand for housing. Population
growth and millennial generation entering prime
homeownership age suggest a long-term need for new
housing units.

Industry Forecasts for 2024
Industry experts hold a mixed view on the housing market in
2024. The National Association of Realtors (NAR) forecasts
a slight increase in total housing starts, with single-family
starts reaching 1,020,000 by Q2 2024. However, they also
acknowledge the continued impact of affordability challenges.
(Single-family starts: This refers to the initiation of construction
on new homes designed for single families, meaning they are
not attached to other units like condominiums or townhouses.)Potential Challenges for 2024
While there are reasons for optimism, there are also potential
headwinds for the housing market in 2024:• Economic Uncertainty: The broader economic climate
remains uncertain. Geopolitical tensions and potential
recessionary fears could dampen consumer confidence andimpact housing demand.
• Inventory Levels: Existing home inventory levels are slowly
rising, which could put downward pressure on new homesales, especially if mortgage rates remain elevated.

Looking Ahead: A Market in Transition
The U.S. housing market in 2024 is likely to be one intransition. The era of supercharged demand and rapid pricegrowth may be over, replaced by a more balanced market
with a focus on affordability. Builders will need to adapt tochanging consumer preferences and prioritize value for money.
Technology and innovation in construction methods could playa role in improving efficiency and reducing costs. Additionally,a focus on sustainable building practices and energy-efficient
homes could attract a new generation of buyers.

Conclusion
The U.S. housing market in 2024 is likely to be a storyof cautious optimism. While challenges remain, such as
rising interest rates and economic uncertainty, there arealso underlying factors that suggest a potential rebound.
Demographics and a long-term need for housing will continue
to drive demand.

Here are some key takeaways for different stakeholders in themarket:• Builders:o Affordability: In a market with rising interest rates andpotentially fewer buyers, builders will need to prioritize
affordability. This could involve offering smaller floor
plans, utilizing more cost-effective building materials, orstreamlining construction processes to reduce costs.
o Value Engineering: The concept of value engineering
involves optimizing designs to deliver the most value for theprice. Builders can focus on features that are most importantto buyers, such as functional layouts and energy efficiency,
while minimizing unnecessary frills.
o Niche Markets: Catering to specific buyer groups can bea successful strategy. First-time homebuyers, for example,
might be attracted to smaller, starter homes with lower pricepoints. Another growing niche is the market for energyefficient homes. Builders can offer features like improved
insulation, high-performance windows, and energyefficient appliances, which can attract environmentallyconscious buyers and potentially lead to lower utility bills forhomeowners.
• Buyers:o Competitive Market: The market in 2024 might be morecompetitive than recent years due to a potential rise ininventory and fewer buyers competing with historically low
mortgage rates. Buyers should be prepared to potentiallysubmit multiple offers and be flexible on some aspects of
their search.
o Careful Budgeting: Careful budgeting is crucial in any
housing market, but especially in a scenario with risinginterest rates. Buyers should factor in not just the purchaseprice, but also closing costs, property taxes, and ongoing
maintenance expenses. Having a realistic understanding ofthese costs will help them determine a comfortable pricerange.
o Long-Term Perspective: Buying a home is a long-term
investment. While affordability is important in the shortterm, buyers should also consider the long-term value of theirpurchase. Factors like location, school district, and potential
for appreciation can also be important considerations.
• Policymakers:o Affordability Programs: Down payment assistanceprograms can help make homeownership more accessible tofirst-time buyers or those with limited savings. Policymakers
can explore implementing or expanding such programs tostimulate demand in the market.
o Economic Stability: A stable economic environment isvital for a healthy housing market. Policies that promote
job growth and economic stability can indirectly benefit
the housing market by increasing consumer confidence andpurchasing power. The coming months will be crucial indetermining the trajectory of the U.S. housing market in
2024. With careful planning and adaptation, all stakeholders
can navigate the changing landscape and contribute to a moresustainable and balanced housing market.
惠達雜誌

Hardware & Fastener Components - no.62/2024• Mortgage Rate Fluctuations: Mortgage rates have shown
some signs of stabilization and even a slight decline inrecent months. If this trend continues, it could improveaffordability and stimulate buyer demand. The Federal
Reserve's monetary policy decisions will significantly
influence mortgage rates in the coming months.

Industry Focus >>077