Market Recap: Housing Market Index Improves, Housing Starts and Building Permits Down, Existing Home Sales Up
Mortgage rates trended slightly upward this week. The home builders’ housing market index improved to a six-month high. Housing starts and building permits declined slightly, but single-family housing permits are strong. Existing home sales recovered after hurricane-related slowdown.
The National Association of Home Builders (NAHB) releases a monthly housing market index based on builders’ perceptions of the current market, expectations for the next six months, and buyer foot traffic. In October, the index surged up 4 points month-over-month to a level of 68. NAHB Chairman Granger MacDonald explained that home builders are recovering from the shock of the hurricanes. Despite labor shortages hindering productivity, there is a substantial need for construction across Texas, Florida, and the Southeast. Current sales conditions improved to 75, sales expectations are up to 78, and buyer foot traffic is up to 48. Any reading above 50 is considered positive.
Housing starts track ground broken on residential construction projects and building permits counts permits issued. In September, housing starts dropped 4.7% month-over-month to a level of 1.127 million. Building permits also fell, down 4.5% month-over-month, to a level of 1.215 million. However, single-family permits, specifically improved, up 3.1% annually. Single-family home permits also outweighed apartment construction, which is a positive shift.
Existing home sales or resales make up the majority of real estate transactions. In September, existing home sales improved 0.7% month-over-month and 1.9% year-over-year. Housing inventory itself is down 6.4% from one year ago. Sales in the South were still slowed by hurricane recovery, down 0.9%. Sales were up 3.3% in the West, 1.6% in the Midwest, and unchanged in the Northeast.
The housing market continues to struggle with limited inventory. With fewer homes available for sale, prices appreciate and the market becomes more competitive. Despite rising prices, rates remain historically low.
Sources: Bloomberg, CNBC, MarketWatch, MarketWatch, Mortgage News Daily