A decline in US housing permits in December signaled continued constrains on new construction to start 2025, even as single-family starts rose.
Suspension-grade polyvinyl chloride (PVC) contracts in the US were flat for December with Argus assessing the price at 57.5¢/lb. Discussions for January point to a possible rollover as well, even as feedstock ethylene prices rise, because demand is still soft at the start of the new year.
Privately-owned US housing permits declined to a seasonally-adjusted annual rate of 1.483mn units in December, down 0.7pc from November and 3.1pc off from December 2023 according to the US Census Bureau and the Department for Housing and Urban Development (HUD). Single-family permits were at a rate of 992,000 units in December, up 1.6pc from November but still 2.5pc lower from a year earlier.
New starts were at a seasonally-adjusted annual rate of 1.499mn units, a 15.8pc increase from November but still 4.4pc below December 2023. The jump was attributable to a 59pc surge in multi-family home starts, which tend to be more volatile month-to-month. Single-family starts grew to a rate of 1.05mn units, up 3.3pc from November but still 2.6pc lower from the year before.
Total permits never grew for two consecutive months or longer over the course of 2024, in large part due to volatility in multi-family construction. Single-family permits did grow each month since September, but each month remained below the prior year's rate from June onward. Both the inconsistent growth in overall permits as well as lagging year-over-year improvement in single-family permits have contributed to PVC buyers in the US market expecting stable but soft demand for the first half of 2025.
Builder confidence rose by 1 point in January to 47, according to the National Association of Home Builder (NAHB)/Wells Fargo Housing Market Index (HMI). Builders hope the new year will bring a better economic and regulatory environment. But concerns remain that building material tariffs and costs, as well as a larger government deficit could put upward pressure on inflation and mortgage rates. Any number below 50 still indicates a bearish sentiment.
The modest expectations from housing market participants come as 30-year mortgage rates rose above 7pc last week, as the Federal Reserve scaled back its expected interest rate cuts for 2025 to two in mid-December from four quarter point cuts penciled in in September. Both developments add further pressure to the housing market by raising the cost to buy homes as well as to build them.