Market Forecast: Housing Starts, Building Permits, and Housing Market Index
Mortgage rates trended upward last week following continued uncertainty surrounding tax and healthcare reform. This week, the National Association of Home Builders (NAHB) will release their monthly housing market index, housing starts and building permits come out Tuesday, and the weekly mortgage applications survey comes out Wednesday.
The NAHB housing market index is a survey based on home builders’ opinions on present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers in new homes. This report serves as a gauge of housing demand and also a prediction for future activity like housing starts and new home sales. In April, the housing market index read 68. Any reading above the 50 neutral threshold indicates a strong housing market.
Housing starts track the number of residential construction projects started and building permits reports on permits issued for all types of construction projects. Housing starts and building permits are indicative of future housing market activity like new home sales. In March, there were 1.215 million housing starts and 1.260 million building permits.
The Mortgage Bankers Association (MBA) mortgage application survey is a weekly report on mortgage applications segmented by new purchase and refinances. Last week, both segments of the index increased with a composite week-over-week gain of 2.4%. With the Federal Open Market Committee (FOMC) leaving rates unchanged, home buyers are choosing to lock rates while they remain low.
Spring and summer are typically busy seasons for the housing market. With home prices appreciating and inventory tight, many homes are selling faster than in previous years. This week’s numbers will be the initial reports from second quarter of 2017.
Sources: Bloomberg, Chicago Tribune, CNBC, MarketWatch, Mortgage News Daily