Blog posted On February 17, 2020
Markets are closed today in observance of the Presidents Day holiday. Mortgage rates continued to trend lower last week. There are several important housing reports scheduled for this short week, including the National Association of Home Builders’ (NAHB) housing market index, housing starts and building permits, and existing home sales.
The NAHB housing market index surveys home builder sentiment on current sales conditions, sales expectations for the next six months, and buyer foot traffic. Any reading above 50 is considered positive. Home builder sentiment started 2020 on a positive note, in January the index read 75. Current sales conditions fell 3 points to a level of 81, sales expectations for the next six months were unchanged at 79, and buyer foot traffic increased to 58.
Housing starts track ground broken on residential projects and building permits track permits issued. In December, housing starts increased 16.9% month-over-month and 40.8% year-over-year to a seasonally adjusted annual rate of 1.608 million units. Building permits, however, declined 3.9% month-over-month to a seasonally adjusted annual rate of 1.416 million.
Existing home sales or resales make up about 90% of real estate transactions. In December, existing home sales increased 3.6% to a seasonally-adjusted annual pace of 5.54 million. Supply of available homes for sale fell substantially, down to a 3-month supply. By comparison a balanced market typically has a 6-month supply.
Home builders are feeling confident about 2020 with strong buyer demand and historically low mortgage rates. Many home buyers are already facing competitive markets with a limited number of homes for sale. If you’re looking to buy a home this year, get preapproved for mortgage financing before you start shopping. Showing sellers you’ve already started the financing process makes your offer stronger than other potential buyers who have not already gotten approved for a mortgage.