• Michael Diaz
  • News
  • Market Recap: Rate Hike, Home Builders Confidence Declines, and Housing Starts and Building Permits Drop

Market Recap: Rate Hike, Home Builders Confidence Declines, and Housing Starts and Building Permits Drop

  • June 16, 2017

As expected, the Federal Open Market Committee (FOMC) voted to raise the benchmark interest rate.   Mortgage rates did not change drastically following the announcement, increasing slightly according to some sources.  The National Association of Home Builders’ (NAHB) housing market index declined slightly.  Housing starts and building permits declined.

Though the FOMC rate hike was widely anticipated, some economists posited that inflation is running below the 2% goal.  In its statement, the Fed acknowledged the slowed inflationary numbers, but suggested an uptick in consumer spending and the strong labor market were significant enough to move rates.  The statement also included plans to start winding down the balance sheet, currently valued at $4.5 trillion. 

The NAHB housing market index is a composite report based on builders’ perceptions of current sales, sales expectations for the next six months, and buyer foot traffic.  In June, builder confidence dropped slightly to a level of 67, from the downwardly revised May reading of 69.  Current sales conditions dropped two points to 73, sales expectations also dropped two points to 76, and buyer foot traffic declined two points to 49.  In a statement, NAHB Chief Economist Robert Dietz said, “As the housing market strengthens and more buyers enter the market, builders continue to express their frustration over an ongoing shortage of skilled labor and buildable lots that is impeding stronger growth in the single-family sector.”

Housing starts count ground broken on single family homes.  In May, housing starts decreased 5.5% to a level of 1.09 million and building permits decreased 4.9% to a level of 1.17 million.  Declines were driven by slowed construction in the South and Midwest.  The construction industry is facing labor shortages and limited lot availability. 

Inventory constraints continue to be problematic for housing.  Builders are struggling to supply the demand, and house prices are going up.


Sources: Bloomberg, Economic Calendar, HousingWire, MarketWatch, Mortgage News Daily

Michael Diaz
Sales Manager
NMLS # 1414515
Branch NMLS # 1828011

Michael Diaz

PHONE: (954) 554-1938

CMG Image
© CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. CMG Mortgage, Inc. is licensed in all 50 states and the District of Columbia. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org).