Market Forecast: Housing Market Index, Housing Starts and Building Permits, and Existing Home Sales

Blog posted On January 18, 2021

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Last week, mortgage rates trended slightly upward, but still remain near record lows. This week, the National Association of Home Builders’ (NAHB) housing market sentiment index is scheduled for release on Tuesday. On Thursday, the reports on housing starts and building permits will be released, and on Friday the existing home sales report will come out.

The NAHB housing market sentiment index is based on a survey of home builders’ perceptions on current sales activity, sales expectations for the next six months, and buyer foot traffic.  Any reading above 50 is considered positive. In December, home builder sentiment dropped for the first time in three months. After hitting a record high in November, the sentiment index dropped to 86 in December. Though it is a four point drop from the previous month, 86 is still the second highest reading that the index has ever recorded.

Housing starts track ground broken on residential projects and building permits track permits issued. In November, both housing starts and building permits increased. Housing starts rose 1.2% month-over-month to reach a seasonally adjusted rate of 1.55 million, while building permits rose 6.2% month-over-month to reach a seasonally adjusted rate of 1.64 million. Year-over-year, housing starts were up 13% while building permits were up 8.5%. The pace of building permits in November was the highest recorded in 14 years.

Existing home sales or resales track the sales of previously constructed homes and make up approximately 90% of residential real estate transactions. In November, existing home sales dropped by 2.5%, falling to an annualized rate of 6.69 million. Year-over-year, however, existing home sales were up 25.8%.

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Sources: CNBC, MarketWatch, MarketWatch, MarketWatch