Market Forecast: Housing Market Index, Existing Home Sales, FOMC Meeting, and More
This week will be a full week for housing with numerous important housing reports scheduled. On Monday, the National Association of Home Builders (NAHB) will release the housing market index. On Tuesday, housing starts and building permits comes out. On Wednesday, the National Association of Realtors (NAR) will release the existing home sales report. The Federal Open Market Committee (FOMC) is scheduled to meet Tuesday and Wednesday and a press conference with Fed Chair Janet Yellen will follow on Wednesday.
The NAHB housing market index has been largely positive this year, despite concerns over shrinking inventory. The index is comprised of builders’ outlook on current sales, expected sales over the next six months, and buyer foot traffic. In July, the index registered at 68. Any reading above 50 is considered positive.
Housing starts and building permits are used to gauge future housing market activity. Housing starts tracks residential projects where ground has broken and building permits tracks permits issued. In July, housing starts declined 4.8% to a level of 1.16 million and building permits dropped 4.1% to a level of 1.22 million.
Existing home sales or resales comprise the majority of real estate transactions. In July, existing home sales declined 1.3% month-over-month, but improved 2.1% year-over-year, to a level of 5.440 million. Home prices are appreciating due to inventory constraints.
The FOMC is not expected to raise rates after this policy meeting due to slowed inflation and hurricane recovery. In December 2016, Fed Chair Janet Yellen projected three rate hikes in 2017, and the committee has since raised rates twice. Comments from Fed officials indicate that the market is not meeting inflationary goals and further rate hikes are not warranted at this time.
Sources: Bloomberg, MarketWatch, Mortgage News Daily