Rocket Fuel Newsletter – Home builders and rising costs

Last week, a kayaker in Chile was swallowed whole by a humpback whale. His father witnessed the ordeal and even captured it on video. Thankfully, the whale wasn’t interested in the kayaker, and he escaped unharmed after a few scary moments.

This week, read about the current trends in home builder confidence, as well as the state of renting and homeownership.

Fuel up! 🚀  

Rising costs shake home builder confidence

The National Association of Home Builders (NAHB) Housing Market Index for February shows that builder confidence in single-family homes dropped 5 points from January, falling to 42. Compared to last February, the index is down 6 points.

A reading below 50 indicates negative sentiment among home builders. The main concerns driving this decline are high building costs, elevated mortgage rates, and policy uncertainty, particularly around issues like tariffs.

Housing starts stumble to begin the year

In January, housing starts dropped nearly 10% from December, falling to 1.36 million. Frigid temperatures and storm-related disruptions have been cited as key factors in the decline. Building permits for future construction remained flat, while housing completions rose 7.6%, suggesting that builders are prioritizing finishing existing projects over starting new ones.

The state of renting and homeownership

The housing market is constantly evolving, influenced by economic shifts, supply and demand changes, and policy adjustments. Almost 2 months into 2025, both home buyers and renters are navigating a landscape shaped by steady home prices, fluctuating mortgage rates, and shifting rental trends. While some Americans are finding relief in rental prices, others are still struggling with affordability - whether they’re renting or trying to make the leap to homeownership.

Over the past year, the rental market has shown signs of cooling, with annual single-family rent growth dipping below 2% for the first time in more than a decade late last year. Cities like Detroit and Washington, D.C., experienced some of the highest rent increases, while places like Austin, Boston, and Phoenix actually saw rental prices decline. This shift suggests renters in certain markets may have more options and negotiating power than in previous years. However, affordability remains a challenge, especially for those looking to transition from renting to owning.

The home buying market, on the other hand, is presenting a mixed picture. While U.S. home prices overall have remained relatively flat, some areas – particularly in the Northeast – have seen prices climb due to limited inventory. Meanwhile, sellers across the country are offering more price cuts, with nearly 23% of recent listings reducing their asking prices in January alone.

For many renters, the dream of homeownership feels like just that – a dream. Month after month, they pay rent – money that isn’t helping them build equity or step closer to buying a home. That’s why we’re excited to introduce RentRewards, a program designed to turn rental payments into potential home buying power.1

Through this initiative, renters can earn $600 applied as a loan-level price adjustment just by making their rent payments on time. This credit can be applied toward the purchase of a home, helping to ease one of the biggest financial barriers for first-time buyers.

With the rental market stabilizing and home prices showing varied movement across regions, 2025 is shaping up to be a year of opportunity and challenge for both renters and prospective buyers. While many will continue renting due to necessity, programs like Rocket Pro’s RentRewards aim to offer them a path forward and Help Everyone Home.

Trade shows are a great place to network, gain insights, and grow alongside other industry professionals. Get ready for purchase season by joining us at these upcoming events:

Claim your spot today to continue your pursuit of new opportunities.

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1Clients who are current renters will receive a $600 credit applied as a loan level price adjustment (LLPA). Current renters are defined as individuals who are currently under a lease agreement. Offer valid on purchase loans for primary residences that are locked on or after February 11, 2025, until March 11, 2025. Offer not available for non-Occupant Co-Clients. Offer not valid on One+, Welcome Home RateBreak and nonagency products (Jumbo Smart, Home Equity Loans, Bank Statement Loans). Offer is nontransferable. Offer is not valid with any other discounts or promotions. Additional restrictions/conditions apply. Rocket Mortgage reserves the right to modify/cancel this offer at any time. This is not a commitment to lend.