Market Recap: Housing Market Index, Existing Home Sales, Housing Starts and Building Permits
Mortgage rates did not fluctuate much this week, hovering the year-long lows they hit last week. The housing market index gave a positive reading. Housing starts declined, but building permits ticked up. Existing home sales surged to the highest level since 2007.
The National Association of Home Builders’ housing market index pulled back slightly in April with a reading of 68. Current home sales and expected home sales each came in strong with respective readings of 75 and 74. Prospective buyer traffic drove the decline with a low reading of 52. Any reading above the threshold of 50 is considered positive. NAHB Chief Economist Robert Dietz commented, “the fact that the HMI measure of current sales conditions has been over 70 for five consecutive months shows that there is continued demand for new construction.
In March, housing starts declined 6.8% to a seasonally adjusted annual rate of 1.215 million and building permits improved 3.6% to a rate of 1.260 million. The increase in building permits was driven by a spike in residential housing permits. These numbers tend to be volatile, in February housing starts increased and building permits decreased. Home builders are still facing problems with labor shortages and increased demand. The unseasonably warm weather that created a busy February, has led into an average March.
Existing home sales comprise the majority of real estate transactions and are one of the most predictive gauges of housing market activity. In March, existing home sales increased 4.4% month-over-month and 5.9% year-over-year, to 5.710 million. Inventory shortage will still impact the spring season, available homes for sale are down 6.6% from one year ago.
Home builders remain optimistic and residential housing permits drove the increase in building permits. Looking ahead, next week’s new home sales and pending home sales will reveal a clearer direction of this spring’s home buying and building season.
Sources: Mortgage News Daily, CNBC, Bloomberg, MarketWatch