Market Forecast: A big week for the housing market, will rates continue to rise?

Blog posted On October 17, 2016

Mortgage rates show little change since Friday; but were on a slow steady climb last week, reaching their highest since September.  We have several housing reports on the horizon including the Home Builders’ Index, Housing Starts and Building Permits, and the Existing Home Sales reports.   These new numbers should shed some light on what to expect over the next few weeks. 

Home Builders’ Index – Reuters reports that the US home builder sentiment index is at its highest in 11 months. After gains in September, we expect October’s index to post similar increases.  An increase in new home sales makes a December interest rate hike more likely. 

Housing Starts, Building Permits – The National Association of Home Builders reports on housing starts and building permits to gauge housing market activity.  Housing starts count the number of privately owned new houses on which construction has been started.  Building permits are counted when they are granted.  Even though new home construction has been on the rise, housing starts and building permits have been on the decline with decreases of 5.4% (housing starts) and 0.4% (building permits) in August. 

Existing Home Sales – Existing home sales saw declines over the summer, partially due to shrinking inventory and rising prices.  With many sellers holding off on selling during an election year, and some buyers weary of rising rates, we expect to see similar metrics this month. 

This week’s upcoming reports are sure to shed more light on the heated housing market and where we can expect to see rates settle.  This month’s housing market metrics will be strong indicators of whether or not we will see an interest rate hike come December.

Sources: Reuters, Wall Street Journal, Bloomberg