Market Recap: Mortgage Applications, Housing Starts, and Building Permits Rebound
Mortgage rates started to trend downward this week, following Federal Reserve Chair Janet Yellen’s dovish remarks at her semiannual testimony last week. The housing market index dropped slightly, but remains positive. Mortgage applications turned around after last week’s Independence Day slow down. Housing starts and building permits also rebounded.
The National Association of Home Builders’ (NAHB) monthly sentiment index is based on builders’ perceptions on current conditions, expectations for the next six months, and buyer foot traffic. Any reading above the threshold of 50 is considered positive. In July, the index dropped two points to a reading of 64, below expectations. Current conditions dropped to a level of 70 and expectations for the next six months dropped to 73. Prospective buyer foot traffic dropped below the neutral level to 48.
For the week ending 7/14, mortgage activity rebounded after dropping during the week of the Independence Day holiday. New purchase applications increased by 1.0% and refinance applications increased by 13.0% for a composite increase of 6.3%. Rates were steadily rising, following the June Federal Open Market Committee meeting, but have started to fall as expectations for further rate hikes have dropped.
In June, housing starts increased by 8.3% to a seasonally adjusted annual rate of 1.22 million, the highest level since February 2017. Building permits also jumped, up 7.4% to a seasonally adjusted annual level of 1.25 million units, the highest level since March 2017. Single-family housing starts were up 9.3% in the Northeast, 7.2% in the South, and 10.6% in the West. The Midwest declined, down 3.6%. Multi-family housing starts also improved, up 13.3% nationwide.
While home builder confidence has slipped, it remains above the neutral threshold. Mortgage applications, housing starts, and building permits each posted significant gains, suggesting momentum is building in the housing market.
Sources: Bloomberg, CNBC, MarketWatch, Mortgage News Daily