16
Dec
By support
Housing Market

Home Builder Index Stays Near Nine Year Peak

Home Builder Index Stays Near Nine Year Peak

Home Builder Sentiment slipped to a reading of 57 in December according to the National Association of Home Builders Housing Market Index. November’s reading of 58 prompted analysts to project a reading of 59 for December. The latest reading marks the sixth consecutive month for readings above 50. Any reading over 50 indicates that more builders are positive about housing market conditions than not.

The one-point decline in December’s reading kept the NAHB Housing Market Index within two points of a nine-year high reached in September.

NAHB: Housing Market Index Suggests Slow Return to Normalcy

NAHB’s chief economist, David Crowe, said that December’s reading was in line with NAHB’s assessment that housing markets are on a “slow march back to normal.” Home builder confidence in conditions contributing to the NAHB Housing Market Index also fell in two categories while remaining unchanged in one.

The gauge of builder confidence in current market conditions moved from last month’s reading of 62 to 61. Builder confidence in upcoming home sales fell from 65 to 64, while confidence in prospective buyer traffic was unchanged at a reading of 45. These results are consistent with real estate market trends slowing during the holiday season and winter months.

Builders Challenged in 2014, Better Conditions Expected in 2015

Analysts said that steady builder confidence may be a result of builders surviving a tough year in 2015. Market conditions, unpredictable interest rates and higher costs of supplies along with high unemployment subdued builder confidence during 2014. The New Year brings prospects of easing mortgage standards and better labor markets, which are expected to boost builder confidence as more home buyers enter the market for new homes.

The Commerce Department is set to release Housing Starts for November on December 16; analysts expect an increase to 1.035 million starts on a seasonally adjusted annual basis as compared to October’s reading of 1.01 million starts. A positive reading for housing starts could further bolster home builder confidence for future readings.

20
Oct
By support
Market Outlook

What’s Ahead For Mortgage Rates This Week – October 20, 2014

Whats Ahead For Mortgage Rates This Week October 20 2014Last week’s economic highlights included the National Association of Home Builders (NAHB) Housing Market Index for October. The Commerce Department also released Housing Starts for September. Freddie Mac reported that the average rate for a 30-year fixed rate mortgage dropped below four percent. The Fed released its Beige Book report, and Weekly jobless claims came in lower than expected. Here are the details:

Homebuilder Confidence Slips in Spite of Lower Mortgage Rates

U.S. Homebuilder confidence in housing market conditions slipped by 5 points to October’s reading of 54 as compared to September’s reading; this was also lower than the expected reading of 59. Builders are concerned over strict mortgage credit rules, but the NAHB’s chief economist noted that pent-up demand, lower mortgage rates and improved labor markets are expected to drive builder confidence in the near term. Readings of 50 and above indicate that more builders are confident about market conditions than not.

Freddie Mac reported lower average mortgage rates across the board with the rate for a 30-year fixed rate mortgage at 3.97 percent, a drop of 15 basis points from the prior reading. 15-year fixed rate mortgages had an average rate of 3.18 percent from the prior week’s reading of 3.30 percent. The average rate for a 5/1 adjustable rate mortgage fell by 13 basis points to 2.92 percent. Average discount points remained at 0.50 for all mortgage types.

If 30-year fixed rate mortgages can stay below the four percent mark, this could mean additional incentive for fence-sitters to become active home buyers.

Surprise: New Jobless Claims Hit 14-Year Low

Concerns over job markets and employment stability have consistently been of concern to home buyers in the aftermath of the recession. Last week’s jobless claims report brought encouraging news as it came in at 264,000 new jobless claims filed against predictions of 289,000 new claims and the prior week’s reading of 287,000 new jobless claims filed. This was the lowest number of new jobless claims filed in more than 14 years. Analysts said that lower numbers of weekly jobless claims indicate fewer layoffs, which should help boost prospective home buyers’ confidence in job stability.

Fed: Economy Growing at “Modest to Moderate Pace”

The Federal Reserve released its Beige Book report on Wednesday. This report contains anecdotes from business sources within the 12 Federal Reserve districts. The report said that the economy continues to grow at a modest to moderate pace and noted that potential concerns over the stronger U.S. dollar causing increases in export costs did not concern the Fed’s business sources.

Housing Starts, Consumer Confidence Up

September’s housing starts were above both expectations and August’s reading. 1.02 million starts were reported with the majority being multi-family homes. The expected reading was 1.015 million housing starts; this was based on August’s reading of 956,000 starts. This news is consistent with the drop in builder confidence for sales of new single-family homes.

The University of Michigan/Thompson-Reuters Consumer Sentiment Index for October rose to 86.4 against an expected reading of 83.5 and September’s reading of 84.6. This was the highest consumer sentiment reading in seven years. Analysts rained on the consumer sentiment parade by noting that recent jitters over Wall Street and concerns about Ebola outbreaks could cause the Consumer Sentiment Index to lose ground.

What’s Ahead:

Next week’s scheduled economic reports include the National Association of REALTORS® Existing Home Sales report, FHFA’s Home Price Index and New Home Sales. Leading Economic Indicators will also be released.

25
Aug
By support
Market Outlook

What’s Ahead For Mortgage Rates This Week – Aug 25, 2014

Whats Ahead For Mortgage Rates This Week Aug 25 2014Last week’s economic news brought several reports related to housing. The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index for August rose by two points to 55, which was its highest reading in seven months.

Components of the NAHB HMI include builder surveys on conditions related to upcoming sales of new homes, which rose by two points for a reading of 65. Builder sentiment concerning present sales conditions also rose by two points to 58.

Builder views on prospective buyer traffic rose from 39 to 42. Readings above 50 indicate that more builders viewed housing market conditions as positive as negative.

NAHB cited job growth and low mortgage rates as conditions driving higher builder confidence in market conditions.

Housing Starts, Building Permits Up in July

According to the Commerce Department, housing starts and building permits rose in July. Housing starts increased to 1.09 million from June’s reading of 945,000 and exceeded expectations of 975,000. This reading reflects higher builder confidence and could contribute to easing demand for housing as new homes expand the inventory of available homes.

Construction of single family homes accounts for about 75 percent of new home construction. July’s reading was 656,000 single family housing starts on an annual basis. Regionally, housing starts declined by 25 percent in the Midwest, but rose by 44 percent in the Northeast, 29 percent in the South and 18.60 percent in the West.

Building permits issued in July rose to an annual rate of 1.05 million, which was an increase of 8.10 percent over June’s reading of 973,000 permits issued. Permits for single family homes increased by 0.90 percent to a reading of 640,000 permits annually.

July’s readings for housing starts and building permits are in line with overall economic growth and suggest that housing markets may improve in coming months as the supply of new homes increases.

Let’s add more icing to the cake. The National Association of REALTORS® reported that existing home sales rose to 5.15 million on a seasonally adjusted annual basis against predictions of 5.00 million existing homes sold and June’s reading of 5.05 million sales of previously owned homes.

Mortgage Rates Fall, FOMC Minutes Indicate Economic Improvement

Freddie Mac’s weekly survey of mortgage rates reported that average rates fell across the board: The average rate for a 30-year fixed rate mortgage dropped by two basis points to 4.10 percent with discount point lower at 0.50 percent.

The rate for a 15-year mortgage dropped by one basis point to 3.24 percent with discount points unchanged at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage dropped by two basis points to 2.95 percent with discount points unchanged at 0.50 percent.

The Federal Open Market Committee (FOMC) of the Federal Reserve released minutes from its July meeting. Highlights included the committee’s 9-1 vote in favor of continuing the slow pace of reducing economic stimulus.

The minutes indicated that the committee intends to keep the federal funds rate below normal levels for “some time.” Previous FOMC statements have consistently indicated the Fed’s intention to maintain very low short-term interest rates after asset purchases under QE3 end in October, but FOMC has not released a specific time frame or details of its intentions concerning the federal funds rate.

The Fed acknowledged economic improvements, but cited lingering concerns over unemployment, which remains higher than average.

More Good News: Jobless Claims Lower, Economic Indicators Up

Weekly jobless claims fell to 298,000, lower than expectations of 300,000 new jobless claims and the prior week’s reading of 312,000 new claims. Leading economic indicators (LEI) rose by 0.89 percent in July after increases in May and June. Analysts interpreted this reading as a further indication of stronger economic conditions.

What’s Ahead

This week’s scheduled economic reports include New Home Sales, the Case-Shiller Home Price Index and FHFA House Price Index. General economic reports include the Consumer Confidence Index and the University of Michigan Consumer Sentiment Index. It will be interesting to see whether consumer views of the economy are consistent with recent economic improvements.