Market Forecast: Housing Market Index, Housing Starts, and Building Permits
Mortgage rates were trending upward last week, then edged downward after Federal Reserve Chair Janet Yellen’s semiannual testimony before the Senate Banking Committee. This week, the National Association of Home Builders (NAHB) releases its housing market index on Tuesday. Housing starts and building permits come out Wednesday, along with the weekly mortgage application survey.
The National Association of Home Builders (NAHB) housing market index is an evaluation of home builders’ outlook on current sales, expected sales, and buyer foot traffic. The housing market index has hit record highs over the past few months. In June, it registered at 67, any number above 50 is considered positive.
Mortgage applications decreased significantly last week. Due in part to office closures on Independence Day, and the recent uptick in mortgage rates. New purchase applications dropped 3.0% and refinance application dropped 13.0%, for a composite decrease of 7.4%.
Housing starts counts residential construction project where ground has broken and building permits tracks permits issued for future projects. Both housing starts and building permits are used to gauge future housing market activity. In May, both housing starts and building permits decreased as the construction industry faces limited land availability and labor shortages.
In her semiannual testimony, Yellen remarked that there will not be a need for many more rate hikes, maintaining her dovish policy stance. Mortgage rates reacted with a slight drop. Housing numbers have been mixed over the last several months, but confidence throughout the industry remains high.
Sources: Bloomberg, MarketWatch, Mortgage News Daily