18
Nov
By First Rate Financial Group
Real Estate

NAHB: Rising Demand for Homes Boosts Builder Confidence

NAHB: Rising Demand for Homes Boosts Builder ConfidenceBuilder confidence in housing market conditions reached a new record high in November according to the National Association of Home Builders. November’s index reading of 90 was five points higher than in October. Index readings over 50 indicate positive builder sentiment toward market conditions. Readings for the Housing Market Index fell below 50 in April and May as the COVID-19 pandemic grew.

Component readings for the Housing Market Index rose six points to 96 for current housing market conditions and one point to 89 for builder confidence in home sales in the next six months. Builder confidence in buyer traffic in new housing developments rose three points to 77. Readings for buyer traffic typically didn’t exceed 50 until recently. High demand for homes is associated with record-low mortgage rates and changing priorities created by the pandemic.

While demand for homes usually slows in the colder months, the pandemic has caused families to re-evaluate their housing needs as more people work from home and children attend school online or are homeschooled. Larger homes cost more, which contributes to home sellers moving to suburban or rural areas to accommodate the additional expenses of buying and maintaining larger homes.

Regional Housing Market Conditions Mixed in November

The NAHB reported gains in builder confidence in three of four regions. The Midwest led with a nine-point increase in builder confidence. The South and West also showed rising builder confidence, but builders in the Northeast reported a five-point drop in builder confidence.

Robert Dietz, chief economist for the NAHB said, “In the short run, the shift of housing demand to lower density markets such as suburbs and exurbs along with ongoing low resale inventory levels is supporting demand for home building.”  Rising demand for homes as compared to low numbers of pre-owned homes available is creating additional demand for new homes. 

Analysts said that the demand for new homes will last for quarters or years as it will take time for builders to catch up with the unusually high demand for single-family homes.

A seasonal slow-down in home sales coupled with a new and severe wave of COVID-19 cases may cause challenges for home builders in the coming months, but the current demand for homes could rise if city-dwellers continue to move to less congested areas. Recent positive news about COVID-19 vaccines could impact flight from cities to suburbs, but government approval, manufacture, and distribution of vaccines can’t happen immediately.

20
Jul
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – July 20, 2020

What's Ahead For Mortgage Rates This Week - July 20, 2020Last week’s economic reports included readings from the National Association of  Home Builders on housing markets along with Commerce Department data on housing starts and building permits issued. Weekly reports on mortgage rates and unemployment claims were also released.

NAHB: Builder Confidence in Housing Markets Increases in July

Homebuilders gained confidence in housing market conditions as home buyers sought homes in less-congested suburban areas. Builder confidence rose 14 points to an index reading of 72 in July. NAHB Chair Chuck Fowke said, “Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean.”

Homebuyers sought larger homes to accommodate work-at-home needs and also fled from urban congestion posing hazards due to Covid-19. Robert Dietz, chief economist for NAHB said, “Flight to the suburbs is real.” This trend benefits home builders, who must meet buyer demand.

Inventories of pre-owned homes remained low and improved builder outlook on current sales of single-family homes by 16 points to an index reading of 79.

Builder confidence in market conditions for the next six months rose seven points to 75 and builder confidence in buyer traffic rose 15 points to 58. Index readings over 50 indicate positive market conditions.

Commerce Department readings for June housing starts and building permits issued were higher than in May. 1.19 million housing starts were reported on a seasonally adjusted annual basis as compared to May’s reading of 1.01 million housing starts. 1.24 million building permits were issued in June on a seasonally adjusted annual basis as compared to May’s reading of 1.22 million permits issued.

Mortgage Rates, Jobless Claims

Freddie Mac reported the lowest mortgage rates in 50 years last week;  the average rate for 30-year fixed-rate mortgages fell five basis points to 2.98 percent. Rates for 15-year fixed-rate mortgages fell three basis points to 2.48 percent; rates for 5/1 adjustable rate mortgages rose four basis points to 3.06 percent on average Analysts said that as low mortgage rates encouraged would-be buyers to enter the market, increasing cases of COVID-19 in some areas could cause markets to cool as fears of layoffs and unemployment impact real estate markets.

New and continuing jobless claims fell last week but remained much higher than pre-COVID-19 readings. 1.30 million initial jobless claims were filed as compared to the prior week’s reading of 1.31 million new claims. Continuing jobless claims fell to 17.30 million claims as compared to the previous weekly reading of 18.10 million ongoing jobless claims.

What’s Ahead

Readings on sales of new and previously-owned homes will be released along with weekly reports on mortgage rates and unemployment claims.

24
Jan
By support
Housing Market

NAHB: Home Builder Confidence Drops in January

Homebuilder confidence in housing market conditions dipped two points in January; ongoing challenges including labor shortages and materials costs were cited by the National Association of Home Builders, which provides monthly readings on home builder sentiment. Three component readings of the Housing Market Index declined by one point each. Readings for current sales conditions, housing market conditions for the next six months and for buyer traffic within new single-family housing developments were 79, 78 and 54 respectively.

Readings over 50 indicate positive builder sentiment. The reading for buyer traffic seldom exceeds 50. Current readings support continued builder confidence in current and future housing market conditions. NAHB Chief Economist Robert Dietz said housing demand should continue to grow in 2018 based on the gauge of future market conditions remaining in the 70s range. Real estate pros have repeatedly cited slim inventories of homes for sale as driving rapidly rising home prices.

NAHB estimated 1.125 million housing starts for 2018, which was 2.70 percent higher than for2017. The Commerce Department released its annual rate of housing starts in December at 1.192 million starts; Building permits were issued at the annual rate of 1.302 million permits issued in December, based on November’s annualized reading of 1.303 million permits issued.

Regional Builder Confidence Readings Rise

Regional readings for builder confidence were higher in all four regions tracked by NAHB. Calculated on a three-month rolling average, the Northeast gained five points for an index reading of 59; The Midwest posted a one-point gain for a January reading of 70. The South posted a one-point gain for an index reading of 73 and the West reported a two-point gain for a reading of 81.

Analysts said throughout 2017 that building more homes would be the only way to solve the housing shortage and resulting challenges including rapidly rising home prices that eliminate first-time and moderate-income home buyers out of affordable home prices and home financing options.