Market Forecast: Mortgage Apps, Housing Market Index, Housing Starts and Building Permits
Mortgage rates did not move significantly last week, remaining historically low. The two most significant housing reports scheduled for release this week include the National Association of Home Builders’ (NAHB) housing market sentiment index and housing starts and building permits. The Mortgage Bankers Association (MBA) weekly mortgage application survey is also scheduled for release.
The MBA mortgage application survey returned mixed results for the week ending 1/3. New purchase mortgage application submissions increased 5.0% and refinance mortgage application submissions decreased 8.0% for a composite decrease of 1.5%. The data suggests home buyers are shopping earlier this year than they have in previously, but refinance activity has slowed.
The NAHB housing market sentiment index is based on a survey of home builders’ perceptions about current sales conditions, sales expectations for the next six months, and buyer foot traffic. Any reading above 50 is considered positive. In December, the index reached a level of 76, a 20-year high. Current sales conditions climbed to a level of 84 and sales expectations for the next six months jumped to 79. Buyer foot traffic also increased to a level of 58.
Housing starts track ground broken on residential projects and building permits track permits issued. In November, housing starts increased 3.2% to a seasonally adjusted annual rate of 1.365 million units, a 10-month high. Year-over-year, starts were up 13.6%. Building permits also increased, up 1.4% month-over-month to a seasonally adjusted rate of 1.482 million, the highest level in 12 years.
Construction activity is expected to pick up early this year, driven by strong buyer demand. Many markets have gotten increasingly competitive as home buyers are competing over a limited number of homes for sale. Home builders will likely be busy this year, replenishing inventory to satisfy buyer demand.
Sources: CNBC, CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily