Market Forecast: Mortgage Apps, Housing Market Index, Housing Starts and Building Permits

  • March 12, 2018

Mortgage rates did not fluctuate greatly last week, leveling off after an upward trend.  Refinance mortgage applications picked up, but new purchase applications pulled back slightly.  This week, the National Association of Home Builders (NAHB) will release its housing market sentiment index and housing starts and building permits will come out on Friday. 

The Mortgage Bankers Association’s (MBA) weekly mortgage application survey has seen some volatility in recent weeks.  Home buying and selling typically picks up in the spring, as warmer weather draws shoppers out.  For the week ending 3/2, the composite increase was 0.3%, after a 1% decline in new purchase and 2% increase in refinance applications. 

The NAHB housing market sentiment index evaluates builders’ perceptions on current sales activity, expectations for the next six months, and buyer foot traffic.  In February, the index was unchanged month-over-month at a strong 72.  Current sales conditions registered at 78, expectations for the next six months were a robust 80, and buyer foot traffic came in at 54.  Home builders are confident heading into spring, as buyer demand drives the need for new construction.

Housing starts track ground broken on residential projects and building permits track permits issued.  Both figures help predict future construction activity and new home sales.  In January, housing starts surged, up 9.7% to a seasonally adjusted annual rate of 1.326 million.  Building permits also increased, up 7.4% to a seasonally adjusted annual rate of 1.396 million.  After cold December weather stalled construction, housing starts and building permits bounced back.  With the housing industry hurting for inventory, there is substantial demand for new homes. 

Mortgage rates held steady last week, following a robust jobs report.  Though the labor market continues to add new jobs, wage growth is stagnating.  Employers have also reported difficulty in trying to fill open positions.  The Federal Open Market Committee (FOMC) will meet next week.  Investment banking company, Goldman Sachs suggests a rate hike is 95% certain.  Even after three federal interest rate hikes in 2017, average mortgage rates only stand about half of a percentage point higher than this time last year.  

 

Sources: Bloomberg, CNBC, CNBC, CNBC, MarketWatch, Mortgage News Daily

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