Market Forecast: Mortgage Apps, Housing Market Index, and Housing Starts and Building Permits

Blog posted On August 13, 2018

Mortgage rates continued to hold steady last week.  This week, the home builders’ sentiment index will come out on Tuesday, along with the weekly mortgage application survey.  Housing starts and building permits are also scheduled for release. 

The Mortgage Bankers Association (MBA) weekly mortgage application survey tracks week-to-week changes in new purchase and refinance mortgage applications.  For the week ending 8/3, new purchase applications declined 2.0% and refinance applications fell 5.0% for a composite decrease of 3.0%.  Despite wage growth and low unemployment, lack of available homes for sale is pushing home prices up. 

The National Association of Home Builders’ (NAHB) housing market sentiment index is based on a survey of home builders’ perceptions on current sales conditions, expectations for the next six months, and buyer foot traffic.  The index was unchanged in July, at a reading of 68.  Tariffs impacting the cost of materials and a shortage of labor hampered some home builders’ optimism.  Current sales conditions were unchanged at a level of 74, sales expectations for the next six months fell to 73, and buyer foot traffic ticked up to 52. 

Housing starts tracks ground broken on residential projects and building permits tracks permits issued.  Both reports are used to predict future housing market activity.  In June, housing starts declined 12.3% month-over-month and building permits dropped 2.2% month-over-month.  While buyer demand remains strong, home builders are struggling to keep up.  Affordability concerns related to tariffs and the rising costs of materials are causing the slowdown.  Freddie Mac Chief Economist Sam Khater remarked on the notable construction slowdown, “It’s alarming that the single-family construction permit growth is decelerating at a time when homeownership is rising and millennials are reaching their peak age to really enter the market and buy their first home.”

Home price appreciation has started to decelerate somewhat as mortgage rates rise.  Mortgage interest rates vary from scenario to scenario and are based on other financial factors like credit score, length of good credit history, and the location and cost of the home.  Watching average mortgage rates is one way to get an idea of what your mortgage interest rate will be, but the best way to estimate your mortgage interest rate is to get prequalified with a loan officer.  A loan officer will be able to review your entire financial picture and give you a realistic idea of what to expect to pay for your monthly mortgage payment. 

Sources: CNBC, CNBC, Econoday, MarketWatch, Mortgage News Daily, the Wall Street Journal