NAHB Housing Market Index Unchanged in September

NAHB Housing Market Index Unchanged in SeptemberHome builder confidence in housing market conditions stayed flat in September. The National Association of Home Builders Housing Market Index reported an index reading of 67, which matched expectations and NAHB’s housing market reading for August. Analysts cited recent tariffs on building materials as a significant cause of easing builder confidence.

While NAHB called September’s reading “solid” at 67, the reading was one full point lower than the average reading for 2017 and equaled the lowest builder confidence reading in 2018 to date. Readings over 50 in the Housing Market Index indicate that more builders than fewer are confident in housing market conditions.  

Components of the Housing Market Index were mixed as builder confidence in current market conditions rose one point to 74. Builder confidence in market conditions for the next six months rose two points to a reading of 74. Builder confidence in buyer traffic in new housing developments was unchanged with a reading of 49.

Buyer traffic readings frequently fall below the benchmark reading of 50, so a reading of 49 indicates builders aren’t concerned about buyer interest in new homes.

Home Building Viewed As Cure For Housing Shortages, But Buyers Face Challenges

Housing industry leaders, real estate pros and mortgage lenders continued to look to builders for a solution to severe housing shortages in some areas. Rapidly rising home prices driven by high demand, few choices for buyers and aren’t likely to ease until inventories of available homes increase. Recently rising mortgage rates added to pressures on first-time and moderate-income home buyers.

NAHB Chief Economist Rob Dietz said that trade skirmishes and “burdensome regulations” also contributed to rising home prices. Real estate pros said that local market conditions affected market areas affected by natural disasters including severe red tide algae blooms in Florida and wildfires in Oregon and California. Home sales typically slow in August, but the combination of low inventories of homes coupled with rising prices and natural disasters resulted in lower than expected home sales in August.

Buyer fatigue was cited as a driving factor in slowing home sales as rapidly rising prices and few available homes took a toll on buyer interest. As the school year approached buyers were backing off instead of continuing to compete with cash buyers and bidding wars.

It is commonplace for markets to shift and for trends to change. Your trusted mortgage professional is ready to help you find your best financing options for today’s real estate market.

What’s Ahead For Mortgage Rates This Week – May 21st, 2018

What’s Ahead For Mortgage Rates This Week – May 21st, 2018Last week’s economic releases included the National Association of Home Builders Housing Market Index for May, Commerce Department reports on housing starts and building permits issued. Weekly readings on mortgage rates and first-time jobless claims were also released.

Home Builder Confidence Rises in May

According to the National Association of Home Builders, home builders surveyed indicated higher confidence in housing market conditions for May. April’s reading was downwardly revised to an index reading of 68; analysts expected a reading of 69.  May’s home builder confidence reading was 70. Any reading over 50 indicates that more builders consider housing market conditions to positive.

Three-month rolling readings for regions showed mixed results in May. Northeast and Western regions were unchanged with index readings of 55 and 76 respectively. Midwestern and Southern regions posted a one-point drop with respective index readings of 65 and 92. The NAHB cited high lumber prices as a concern and said that rising materials costs were impacting builders’ ability to produce affordable housing for first-time buyers.

Both housing starts and building permits issued were lower in April than for March; The Commerce Department reported1.287 million housing starts in April as compared to 1.336 million starts in March. Housing starts are calculated on a seasonally-adjusted annual basis. Although housing starts were 3.70 percent lower in April, analysts said there was little concern as the rate of housing starts remained near the highest levels in 11 years.

April’s decline in housing starts was attributed to volatile multi-unit projects; construction rates for single-family homes were little changed. The South reported an increase in housing starts as all other regions reported fewer housing starts. Builders said that labor shortages continue to impact construction rates. Analysts expected construction rates to expand throughout 2018 as demand for homes rises. Building permits issued fell in April to a seasonally-adjusted annual rate of 1.352 million from the March reading of 1.377 million permits issued.

Mortgage Rates, New Jobless Claims

Mortgage rates rose to their highest level in seven years. Rates for a 30-year fixed rate mortgage were six basis points higher and averaged 4.61 percent. The average rate for a 15-year fixed rate mortgage was seven basis points higher at 4.08 percent. Mortgage rates for a 5/1 adjustable rate mortgage averaged five basis points higher at 3.82 percent. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims rose to 222,000 new claims last week as compared to 211,000 new claims filed the prior week. Analysts expected 215,000 new claims filed.

Whats Ahead

This week’s economic releases include readings on sales of new and previously-owned homes and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.

New Home Sales Reach Multi-Year High

New Home Sales 2010-2012The market for newly-built homes remains strong.

As reported by the U.S. Department of Commerce, 372,000 new homes were sold in July on a seasonally-adjusted, annualized basis. A “new home” is a home that can be considered new construction.

July’s New Home Sales report highlights what today’s buyers of new construction and the nation’s home builders have witnessed for themselves already — that the market for newly-built homes is improving in Hendersonville and nationwide.

The number of new homes sold in July on a seasonally-adjusted, annualized basis matches the tally from May 2012, and is the highest reading since April 2010, the last month of that year’s federal home buyer tax credit.

The South Region continues to account for the majority of new construction sales, posting a 48% market share in July. South Region sales were up 9.1 percent as compared to one year ago. The other 3 regions posted higher sales volume as well :

  • South Region : +9.1% from July 2011
  • Northeast Region : +30.4% from July 2011
  • Midwest Region : +21.7% from July 2011
  • West Region : +63.8% from July 2011

Also noteworthy is that the increase in new home sales is coming at a time when new home supplies are slipping.

At the end of July 2012, there were just 142,000 new homes for sale nationwide. This is the smallest new home housing stock in at least 7 years, and a signal that buyers are buying homes faster than builders can build them. At the current pace of sales, the national supply of new homes would sell out in 4.6 months.

Because economists believe that a 6.0-month supply represents a market in balance, the current new home market is decidedly a “sellers market”. Buyers throughout South Carolina should expect higher new home prices ahead.

Dating back to October 2011, the housing market has shown slow, steady growth. Home prices have moved higher and so has builder confidence. If you’re in the market for new construction consider going into contract soon. The longer you wait to buy, the more you may be asked to pay.