Market Forecast: Mortgage Apps, Housing Market Index, and Housing Starts and Building Permits
Mortgage rates have fallen to year-long lows, amidst the Federal Open Market Committee’s vote to cut rates. This week, there are several important housing reports ahead including the Mortgage Bankers Association (MBA) weekly mortgage application survey, the National Association of Home Builders’ (NAHB) housing market sentiment index, and housing starts and building permits.
Last week, refinance mortgage activity ticked up, while new purchase activity was uninspired from the recent rate cut. New purchase application submissions fell 2.0%, but refinance application submissions jumped 12.0% for a composite increase of 5.3%. With mortgage rates hovering the lowest levels in about three years, an increased share of American homeowners could benefit from a mortgage refinance.
The National Association of Home Builders’ (NAHB) housing market sentiment index is a survey based on builders’ outlook on current sales, sales expectations for the next six months, and buyer foot traffic. Any reading above 50 is considered positive. In July, home builder confidence improved to a level of 65. Current sales conditions rose to a level of 72, sales expectations for the next six months is up to 71, and buyer foot traffic improved to a level of 48. NAHB Chief Economist Robert Dietz explained that despite lower mortgage rates, some prospective home buyers are concerned with costs, stating, “the current low mortgage interest rate environment should be getting more buyers off the sidelines, but they remain hesitant due to affordability concerns.”
Housing starts track ground broken on residential projects and building permits track permits issued. Housing starts and building permits are used to predict future housing activity. In June, both housing starts and building permits fell. Housing starts declined 0.9% to a seasonally adjusted annual rate of 1.253 million and building permits were down 6.1% to a seasonally adjusted annual rate of 1.220 million units.
Lower mortgage rates may continue to drive mortgage activity into the fall. Even homeowners that purchased within the last few years may qualify for a lower mortgage rate if they choose to refinance. You can use our mortgage calculator to determine how much you could save with today’s low interest rates.
Sources: CNBC, CNBC, CNBC, Econoday, MarketWatch, Mortgage News Daily