• Brian Hilberth
  • News
  • Market Recap: Home Builders Positive Despite Drop in Housing Starts, Building Permits, and Mortgage Apps

Market Recap: Home Builders Positive Despite Drop in Housing Starts, Building Permits, and Mortgage Apps

  • May 19, 2017

Mortgage rates are down from last week, hovering year-long lows.  The home builders’ sentiment index posted positive numbers in May after a decline in April.  Housing starts and building permits each dropped, and both new purchase and refinance mortgage applications decreased.

The National Association of Home Builders (NAHB) sentiment index rebounded in May after April declines, up 2 points to a reading of 70.  This is the second-highest post-Recession reading.  Both six months sales expectations and current sales conditions saw gains, up to 79 and 76 respectively.  However, buyer traffic dropped to 51, but remains above the neutral threshold of 50.  NAHB Chairman Granger MacDonald commented that builders’ optimism is “solidifying” despite obstacles faced with higher materials cost and labor shortages. 

Housing starts and building permits each scaled back this month.  In April, housing starts dropped 2.6% to an annual rate of 1.17 million, just 0.7% higher than April of last year.  Building permits are down 2.5% to a 1.23 million pace, but up 5.7% year-over-year.  Single-family home construction constituted the majority of housing starts (835,000), a positive sign for homeownership since multi-family construction is typically used for renting. 

The Mortgage Bankers Association (MBA) releases a weekly survey of mortgage applications to track new purchase and refinance activity.  After hitting 8-year highs the previous week, mortgage applications turned around for the week ending 5/19.  New purchase applications dropped 3.0% and refinance applications dropped 6.0% for a composite decrease of 4.1%. 

This week’s mixed housing numbers are still generally positive.  Despite a slowdown in housing starts and building permits and a turnaround in mortgage applications, most of the construction taking place is residential and home builders remain confident.  Next week’s new and existing home sales reports will provide further insight on this spring’s housing activity. 


Sources: Bloomberg, CNBC, MarketWatch, Mortgage News Daily

Latest Tweets

CMG Image
© 2016 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, licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; Loans made or arranged pursuant to a California Finance Lenders Law license No. 6053674. Offer of credit is subject to credit approval. For State specific licensing, visit www.cmgfi.com/licensing.php. To verify our state licenses, please visit www.nmlsconsumeraccess.com. This site is not intended to serve as a business solicitation for residents in the state of Massachusetts and New York.