Single-family homes have long been a staple of the American real estate market, offering privacy, stability, and a sense of independence for homeowners. In September 2024, new home construction saw a significant increase, particularly in the Northeast, as lower mortgage rates made purchasing and building homes more accessible. This surge comes at a time when multifamily housing construction has been slowing, signaling a shift in market dynamics.

According to the U.S. Census Bureau, single-family home construction reached a seasonally adjusted annual rate of 1,027,000 units in September, marking a 5.5% increase compared to the previous year. The Northeast led the way with a staggering 77.4% annual increase in new construction, reflecting strong demand in the region. The primary factor driving this uptick was a dip in mortgage rates, which fell to an average of 6.18% in September, prompting more buyers and builders to move forward with new projects.

Despite this positive momentum, experts caution that market conditions remain volatile. Joel Berner, a senior economist at Realtor.com, pointed out that seasonal adjustments could make the numbers appear more dramatic than they actually are, particularly in regions where weather plays a significant role in construction patterns. Additionally, the downward trend in mortgage rates did not last long. By mid-October, rates had begun climbing again, reaching 6.44%, a shift that could dampen new home construction in the months ahead.

Higher mortgage rates typically discourage potential buyers, as borrowing costs increase, making homeownership less affordable. Robert Dietz, Chief Economist at the National Association of Home Builders, noted that the recent rate increases could slow growth, even after the strong performance seen in September. The balance between interest rates and buyer demand will be crucial in determining whether the momentum in single-family home construction continues or starts to decline.

Regional trends highlight the complexity of the current housing market. While the Northeast experienced a notable rise in single-family home starts, the West saw a slight decline of 0.9%. Varying economic conditions, local regulations, and affordability challenges all contribute to these regional differences. Meanwhile, the slowdown in multifamily housing construction suggests that builders may be shifting their focus toward single-family homes, reflecting changing consumer preferences. However, this trend could have implications for housing affordability, as fewer multifamily units mean fewer options for renters and first-time homebuyers.

Affordability remains a pressing issue despite increased construction activity. Rising costs of materials, labor shortages, and high demand continue to push home prices upward. Experts argue that a substantial boost in home construction is needed to ease the affordability crisis, but this remains a challenge given current economic uncertainties.

Housing affordability has also become a topic of national discussion ahead of the November presidential election. Candidates have proposed measures such as easing building regulations and offering tax incentives to developers to encourage construction. While these policies may provide some relief, the impact of regulatory changes will largely depend on local governments and land-use decisions.

Single-family homes remain a vital part of the real estate market, with recent trends indicating strong demand and increased construction activity in key regions. However, rising mortgage rates and affordability concerns present significant challenges moving forward. For buyers, builders, and policymakers alike, understanding these shifting dynamics will be essential in navigating the evolving housing market.

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New home sales in the United States saw a strong rebound in November, recovering from hurricane-related disruptions in the previous month. According to the Commerce Department's Census Bureau, sales of new single-family homes rose 5.9% to a seasonally adjusted annual rate of 664,000 units. This increase followed an upward revision of October's sales pace to 627,000 units, compared to the previously reported 610,000 units.

Economists polled by Reuters had expected sales to reach 660,000 units, and the latest data slightly exceeded those projections. New home sales, which account for about 15% of overall U.S. housing transactions, tend to fluctuate from month to month, making short-term trends difficult to predict. Despite the volatility, sales were up 8.7% compared to the same time last year, signaling some strength in the market.

However, rising mortgage rates continue to be a concern for both buyers and builders. Data from Freddie Mac showed that the average rate on a 30-year fixed mortgage climbed to 6.72% last week, reversing a previous decline to 6.60%. Elevated borrowing costs have been a major hurdle for prospective homebuyers, limiting affordability and slowing the pace of home purchases.

The Federal Reserve recently lowered its benchmark overnight interest rate by 25 basis points, bringing it to a range of 4.25% to 4.50%. However, the central bank signaled that it would proceed cautiously with further rate reductions in 2025, adjusting its projections to include only two expected cuts instead of the four that had been anticipated in September. This more conservative approach reflects ongoing concerns about inflation and economic stability.

Adding to the uncertainty is the potential impact of policies under President-elect Donald Trump's administration. Economists warn that proposed tariffs on imported goods, tax cuts, and immigration policies could contribute to inflationary pressures, making the Federal Reserve even more hesitant to lower interest rates aggressively. If inflation remains high, mortgage rates could stay elevated, further restraining home sales in the coming year.

While November's rebound is a positive development, the housing market faces ongoing challenges. The combination of high borrowing costs, economic policy uncertainty, and cautious central bank measures could weigh on new home sales in 2025. Builders and buyers alike will be watching closely to see how these factors unfold in the months ahead.

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While high costs and mortgage rates continue to dampen new home sales, homebuilders are expressing growing optimism about the market's future.

According to the latest National Association of Home Builders (NAHB) sentiment index, released Tuesday, builder confidence in the next six months has reached its highest level since April 2022.

NAHB executives attribute this optimism to expectations of regulatory relief following the upcoming presidential election. "While builders are expressing concerns that high interest rates, elevated construction costs, and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election," said NAHB chairman Carl Harris in a prepared statement.

Challenges Persist Amid High Mortgage Rates

Despite their optimism, builders still face significant challenges in the current housing market. High mortgage rates have discouraged buyers, slowing both sales and new home construction in recent years.

Inflation has remained persistent, leading the Federal Reserve to maintain elevated interest rates longer than initially expected. While the Fed made a modest rate cut this fall, borrowing costs remain significantly higher than pre-pandemic levels.

The federal funds rate, which influences mortgage rates, has been at its highest level in two decades as part of the Fed's strategy to curb inflation. This means home loan rates are likely to stay high for the foreseeable future. "Mortgage rates are likely to stay above 6% in the year ahead," said NAHB chief economist Robert Dietz in a statement.

According to Freddie Mac, the average 30-year fixed mortgage rate last week was 6.6%, far above the 2%-3% rates seen during the pandemic or the 4%-5% levels typical before 2020.

Looking Ahead: A Market Poised for Change?

While the current housing market remains challenging, builders are banking on regulatory changes that could provide relief. If policies shift to ease regulations and reduce costs, homebuilders expect increased activity in the months ahead.

For now, buyers and builders alike are keeping a close eye on mortgage rates, inflation trends, and potential economic policy changes that could shape the housing market in 2025.

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When to Move Despite Higher Mortgage Rates

Today's real estate market has many homeowners feeling stuck. With 30-year mortgage rates currently averaging about 7%, homeowners who secured rates closer to 3% during the pandemic are hesitant to sell their homes. This reluctance to lose their low mortgage rates has created an unusual housing market.

Life's major decisions rarely align with ideal market conditions, however. While giving up a low rate might seem unthinkable, mortgage professionals say there are several scenarios in which trading that rate for a new home can be smart.

"There are plenty of good reasons to give up your lower mortgage rate to buy a new home—even if you're among the majority of Americans holding a rate below 5%," says Debbie Calixto, loanDepot's sales manager.

Understanding these scenarios can help you decide whether to hold onto your low home loan rate or move forward with a new home purchase.

Life changes often spark the need for a new home. For example, Calixto points out that growing families might need extra bedrooms or bigger yards. Others might want better schools or shorter commutes. These quality-of-life improvements can make the switch to a higher rate worthwhile. Chris Heller, president of Movoto.com, recently worked with a family who traded their 2.9% rate for a home in a top school district. While the higher rate stretched their budget initially, the long-term benefits were invaluable. "Over time, the property's appreciation offset the higher costs, and their children thrived academically," Heller explains. The family plans to refinance when rates drop.

Marriage, divorce, or health issues might also call for a move. These transitions often require quick decisions that can't wait for perfect market conditions. In these circumstances, the right move gives emotional and practical benefits that outweigh the cost of a higher mortgage rate.

Empty nesters often find that a smaller home's lower maintenance and energy costs offset the increase in monthly payments. These savings, plus the proceeds from selling a larger home, can improve overall financial flexibility. Heller recalls working with a retired couple who traded their suburban home for a more efficient condo. "[They prioritized] convenience over their old low rate," Heller says, highlighting how lifestyle benefits can outweigh rate considerations.

Physical needs also drive downsizing decisions. As you get older, you may find multi-story homes become impractical. Some of Calixto's clients choose single-story homes with aging-in-place features, even if it means taking on a higher rate. These accessible designs help them maintain their independence while preparing for future needs.

Many builders offer attractive perks such as home upgrades, closing cost credits, and temporary rate buydowns to make relocations viable in a high-rate environment. "31% to 33% of homebuilders have been cutting prices every month since July 2024, with reductions of 5% to 6%," says Jeff Taylor, a board member of the Mortgage Bankers Association and managing director at Mphasis Digital Risk. Even more compelling, about 60% of builders now offer some form of buyer incentive.

A promising promotion or dream job might take you to a new city where you can no longer hold onto your old mortgage rate. One of Heller's clients faced this exact situation. They traded a 2.75% rate for one at 6% to accept an out-of-state promotion. "The higher salary and long-term career benefits made the move a sound choice," he says. The increased income more than covered the higher monthly payments.

At times, keeping your low rate makes more sense. For instance, Calixto once worked with a family who wanted to move to a new neighborhood. Despite having substantial equity for a down payment, the higher interest rate and property taxes would've strained their budget. "Affordability should always be your top consideration—no matter how compelling the reasons [are] to move," she says.

Heller and Taylor agree that homeowners should think twice if a move would stretch their budgets too thin. If your home meets your needs and your motivation to move isn't urgent, keeping that low rate might be the wisest decision.

Trading a low mortgage rate for a new home isn't a decision to make lightly. "Start by understanding your finances, including the equity in your current home and your budget for the next purchase," says Heller. Once you know where you stand, meet with several lenders to explore pre-approval options, adjustable-rate mortgages (ARMs), and rate buydowns for potentially below-average mortgage interest rates. From there, a local real estate agent can guide you through current market conditions and available incentives.

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The U.S. housing market saw significant developments in 2024, with single-family construction leading the way in growth. Over the first nine months of the year, a total of 763,990 single-family permits were issued nationwide, marking a 10.1% year-over-year (YoY) increase from 693,908 permits during the same period in 2023.

Regional Trends in Single-Family Permits

Year-to-date (YTD) ending in September 2024, all four regions of the United States experienced growth in single-family permits. The West saw the largest increase at 15.8%, followed by the Midwest with an 11.8% rise. The Northeast matched the national growth average of 10.1%, while the South saw a 7.8% increase.

Among states, 46 and the District of Columbia reported increases in single-family permits. New Mexico led the pack with a 43.6% surge, while Oregon posted the smallest increase at 0.4%. Four states experienced declines: Maryland (-1.5%), New Hampshire (-1.6%), Alaska (-4.3%), and Hawaii (-7.7%).

Texas continued to dominate in single-family construction, issuing 122,976 permits, a 10.5% increase compared to 2023. Florida and North Carolina followed as the second and third highest states, with Florida seeing a modest 1.7% rise and North Carolina reporting an 8.5% increase. Collectively, the top ten states accounted for 63.1% of all single-family permits nationwide.

Multifamily Permits: A Mixed Picture

The multifamily sector painted a different story, with nationwide permits falling by 16.4% YTD in September 2024 compared to the same period in 2023. A total of 362,543 permits were issued, down from 433,862 the previous year.

While most regions saw declines, the Northeast bucked the trend, posting a robust 30.1% increase, largely driven by activity in New York. The West experienced the steepest drop at 31.7%, followed by the South (-20.7%) and the Midwest (-8.4%).

At the state level, 17 states recorded growth in multifamily permits, while 32 states and the District of Columbia reported declines. Rhode Island stood out with a sharp 134.6% increase, rising from 309 to 725 permits. In contrast, the District of Columbia experienced the largest drop, declining by 70.5% from 2,600 to 766 permits.

The ten states issuing the most multifamily permits accounted for 63.2% of the total permits. Texas led with the highest number, but its multifamily permits fell by 27.5%. Florida and California, ranking second and third, saw declines of 27.0% and 33.4%, respectively.

Local Highlights and Metropolitan Data

At the metropolitan level, significant activity was recorded in top markets for both single-family and multifamily permits. Metro areas in Texas and Florida continued to feature prominently for single-family growth, while New York and select markets in the Northeast supported multifamily expansion despite the overall downward trend in this sector.

Implications and Outlook

The divergent trends in single-family and multifamily permits reflect shifting priorities in the U.S. housing market. Single-family construction has rebounded strongly, driven by growing demand and regional variations, while multifamily development faces headwinds due to higher borrowing costs and economic uncertainties.

These trends highlight the need for adaptive strategies in the housing sector, balancing consumer preferences for single-family homes with ongoing demand for affordable and urban housing solutions. As the year progresses, local and state-level housing policies will likely play a pivotal role in shaping the future of both sectors.

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Folsom Mayor Lance Willie expressed excitement about the village's forthcoming $100,000 grant, marking the first significant state funding for the town in nearly two decades. Announced during the Board of Aldermen meeting on September 9, the grant promises to breathe new life into the park located behind Town Hall. Willie credited newly elected state representative Peter Egan for securing the funds, which were included in Act 776 of the State Legislature's 2024 Regular Session to provide state aid for local government recreation improvements.

The park, situated off June Street between La. 40 and Rosa Cryer Street, has been a focal point for Folsom's community. The property, donated several years ago, already features a covered pavilion ideal for hosting events like weddings and family reunions. A walking trail around the park's perimeter also attracts residents seeking outdoor activities. However, additional upgrades are necessary to fully realize the park's potential.

One of the immediate projects underway is the construction of restrooms on the property. The Board of Aldermen previously allocated $40,000 for the project, but most contractor bids exceeded the budget. A bid from Covington-based Tru Consulting and Contracting, slightly over the allocated amount at $47,959, was approved, and construction is set to begin this month.

The $100,000 grant will fund further enhancements, with a portion likely earmarked for lighting to improve safety and usability. Mayor Willie also envisions adding playground equipment to create a family-friendly environment for children during events like fundraisers and cook-offs. He highlighted the need for a fenced-off playground to provide entertainment for kids while adults attend activities at the pavilion.

Board member Jill Mathies suggested seeking public input on park amenities to ensure the upgrades meet community needs. Willie agreed and noted his discussions with St. Tammany Parish Recreation District No. 12 to coordinate efforts and avoid duplicating features available at Magnolia Park. This collaborative approach aims to maximize the park's value to Folsom residents.

In addition to park improvements, the September 9 meeting introduced annual cost-of-living pay increases for Folsom Police Chief Shilo Bruhl and Town Clerk Margra Steele. Chief Bruhl currently earns $49,140, and Clerk Steele earns $42,255 annually. These adjustments reflect the village's commitment to supporting its municipal staff alongside infrastructure investments.

The $100,000 grant represents a significant milestone for Folsom, offering an opportunity to enhance community spaces and strengthen connections among residents. With careful planning and public input, the park behind Town Hall is poised to become a vibrant hub for events and recreation.

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Navigating the Decision to Buy a Home Amid Economic Uncertainty

Many prospective homebuyers awaited the Federal Reserve's meetings in September and November, hoping for relief from the soaring interest rates that have defined the post-pandemic housing market. While the Fed delivered rate cuts—50 basis points in September and another 25 in November—the expected respite for homebuyers failed to materialize. The affordability crisis persists, with some borrowing costs rising even after the September cuts. Treasury yields, which significantly influence mortgage rates, surged following Election Day, reflecting investor concerns that the tax and tariff policies under a Trump presidency could fuel inflation and maintain high borrowing costs.

For those grappling with whether to transition from renting to owning, it is essential to consider whether buying a home aligns with your financial and personal priorities in this challenging market.

Homeownership has always been an expensive endeavor. Beyond the allure of a fixed monthly mortgage payment, owning a home brings additional financial responsibilities. Buyers often underestimate these costs, focusing solely on their monthly mortgage payment without accounting for the broader implications. Ownership includes expenses such as property taxes, homeowners insurance, HOA or condo fees, regular maintenance, and potential renovations or repairs. Once these are factored in, the financial advantage of buying over renting may not hold up.

Renting isn't necessarily the better option by default either. The decision between renting and buying is nuanced and depends on factors like affordability, long-term plans, and personal goals.

To evaluate the choice more effectively, consider three key questions:

How much of your income will go toward housing? A general benchmark is to keep total housing costs, whether renting or buying, at 25% or less of your gross income. This threshold allows for a balance between paying for housing and maintaining sufficient cash flow for other expenses, savings, and discretionary spending. Spending more than this can strain your financial health and limit your ability to achieve other goals. Compare the costs of renting versus buying and assess how each aligns with your income.

How long can you commit to living in one place? Homeownership makes sense when you plan to stay in one location for at least five years. This time frame allows you to build equity and offset the significant transaction costs associated with buying and selling real estate. For those with uncertain plans or a likely move within a few years, renting may be the better option, as real estate is a highly illiquid asset that can be challenging to sell quickly in a volatile market.

What do you actually want? Cultural narratives often paint homeownership as the ultimate financial goal, but this ideal doesn't suit everyone. Renting offers flexibility and fewer obligations, while buying provides the potential for equity building and long-term stability. Ultimately, the decision should reflect your unique needs, preferences, and financial goals. If you are content with renting, prioritize saving and investing to build a robust financial foundation. If buying is important to you, create a strategic plan to make it a reality.

The choice to buy a home should be deliberate, guided by your priorities rather than societal expectations. Homeownership is a significant commitment that requires careful planning and financial readiness. Whether you decide to rent or buy, the key is to ensure that the decision supports your overall financial health and aligns with your lifestyle and aspirations.

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