Market Recap: Builder Optimism Improves, Housing Starts and Building Permits Delayed, Existing Home Sales Decline
Mortgage rates trended slightly downward this week. Home builders are feeling optimistic to start out the year, as rates start to level off and economic conditions remain favorable. The release of the housing starts and building permits report was delayed, due to the lasting effects of the partial government shutdown. Existing home sales fell.
The National Association of Home Builders’ (NAHB) housing market sentiment index rebounded in February, reaching a level of 62, and signaling builder optimism heading into 2019. Any reading above 50 is considered positive. For the second month in a row, all components of the index improved. Current sales conditions increased to 67, expectations for the next six months jumped to 68, and buyer foot traffic is up to 48. MarketWatch contributor Andrea Riquier wrote, “builders are in a sweet spot: economic conditions like a strong job market are helping them sell more homes and falling mortgage rates are making that job even easier.”
The release of the housing starts and building permits report has been delayed until next Tuesday.
Existing home sales or resales declined in January, down 1.2% month-over-month to a seasonally adjusted annual rate of 4.94 million units. The figure marks the lowest level in three years. Although the housing market has grappled with rising rates since 2016, home buyers are expected to see some relief in the first few months of 2019. The report showed the median existing home price increased at the smallest rate since February 2012, signaling a slowdown in home price appreciation. At January’s pace it would take approximately 3.9 months to sell off all inventory, up from December’s 3.7 months, showing that inventory levels are increasing slightly.
Spring and Summer typically mark the busiest home buying and selling seasons of the year. With mortgage rates leveling off and home price appreciation settling down, many prospective buyers may have better luck this year than last year. If you’re looking to buy in the Spring, please let me know. Getting preapproved before you start shopping will help you make a more competitive offer.
Sources: CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily