Market Forecast: Housing Market Index, Housing Starts and Building Permits, and Existing Home Sales
This week will be a short week, with markets closed on Thursday and closing early on Friday, in observance of the Thanksgiving holiday. However, there is a full week of housing news ahead with the National Association of Home Builders’ housing market sentiment index, housing starts and building permits, and existing home sales all scheduled for release.
The NAHB housing market index is based on home builders’ perceptions of current sales activity, expectations for the next six months, and buyer foot traffic. Home builders have been especially busy this year with buyer demand continuing to outpace available for-sale inventory. In October, the housing market index increased 1 point to a level of 68. Current sales conditions improved to a level of 78, expectations for the next six months increased to 75, and buyer foot traffic was up 4 points to a level of 53. Any reading above 50 is considered positive.
Housing starts track ground broken on residential projects and building permits track permits issued. In September, housing starts declined 5.3% month-over-month to a seasonally adjusted annual rate of 1.201 million units. Building permits also fell, less significantly, down 0.6%, to a seasonally adjusted annual rate of 1.241 million units. Usually southern states drive home building, however, starts may have stalled due to Hurricane Florence. Housing starts in the south were down 13.7% month-over-month.
Existing home sales or resales make up the majority of real estate transactions. Existing home sales declined in September, down 3.4% to a seasonally adjusted annual rate of 5.15 million. National Association of Realtors (NAR) chief economist Lawrence Yun attributed the decline to inventory constraints driving home prices up.
Coming out of a busy summer, housing activity tends to slow down. The fall and winter months could be an ideal time to make real estate moves, because the market is less crowded. If you are looking to buy a home before the end of the year, get preapproved for mortgage financing before you make an offer. Mortgage preapproval can expedite the mortgage financing process and ensure a quick closing.
Sources: CNBC, CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily