New Home Starts Projected to Rise in 2024

By Guest Blogger Greg Manning, Pioneer Project Partners

Great news for homebuilders out there: Moody Investors Service now predicts a 5% boost in new home sales this year over 2023, following a 4% annual gain last year.

The rosy forecast is driven by healthy buyer demand from millennials, along with Moody’s expectation that average mortgage rates may fall to 6.4% by year end, from a high of 7.8% last October. Meanwhile, sales of existing homes have been stuck in a trough because homeowners aren’t willing to give up their lower historic mortgage rates. With supply tight, builders have spurred demand by offering incentives like paying closing costs or buying down buyer rates.

Moody Analytics also bolstered their 2024 outlook for U.S. home prices overall, having predicted significant drops earlier. “I expect national house prices to be flat to modestly down over the next two-three years,” said chief economist Mark Zandi. While Western markets generally may lose more ground than Eastern ones (see Moody’s price map at the bottom of this article), Zandi added, “Prices will go more or less sideways for a while.”

All things considered, it’s looking like another solid year for U.S. homebuilders.