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Market Forecast: Housing Market Index, Housing Starts, and Building Permits
Posted On February 13, 2017
Mortgage rates dropped somewhat last week. Rates in 2017 have stayed relatively unchanged following volatility toward the end of 2016. This week, the National Association of Home Builders (NAHB) will release a housing market index. Other scheduled reports include retail sales, housing starts, and building permits.
Consumer spending accounts for two-thirds of the economy, so the retail sales report is a comprehensive measure of consumer activity. Healthy consumer spending suggests wage growth, lending confidence, and positive economic conditions. If retail sales decline, that could be an early indicator of economic slowdown.
The NAHB housing market index based on an outlook survey on the general economy and housing market conditions. Homebuilder confidence indicates economic growth since home building activity triggers lending and spending. Last month the survey read 67, down two points from the December 2016 reading. Any reading above 50 suggests positive conditions.
Housing starts measure construction started on residential property and building permits measure permits issued. Housing starts and building permits forecast future housing activity as they will eventually be registered as new home sales. Growth in housing starts and building permits suggests consumer confidence and positive lending conditions.
Mortgage rates have not changed drastically throughout the year, after stark increases in November and December of 2016. The Federal Open Market Committee (FOMC) did not raise interest rates following their February meeting, but Federal Bank of Philadelphia President Patrick Harker said “March is on the table” for the next rate hike.