Blog posted On November 18, 2019
Mortgage rates did not move significantly last week, trending slightly downward according to some sources. There are several important housing reports scheduled for this week ahead of next week’s Thanksgiving holiday. The National Association of Home Builders’ (NAHB) housing market index is scheduled for release on Monday, followed by housing starts and building permits on Tuesday, and existing home sales on Thursday.
The NAHB housing market index is based on home builders’ perspectives on current sales conditions, sales expectations for the next six months, and buyer foot traffic. Builder confidence climbed in October, reaching a level of 71. Any reading above 50 is considered positive. Current sales conditions increased to a level of 78, sales expectations for the next six months jumped to a level of 76, and buyer foot traffic improved to a level of 54. NAHB chief economist, Robert Dietz, explained, “the second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months.”
Housing starts track ground broken on residential projects and building permits track permits issued. In September, housing starts declined 9.4% to a seasonally adjusted annual rate of 1.256 million units. Year-over-year, however, housing starts are up 1.6%. Building permits also dropped 2.7% month-over-month in September but permits to build single-family homes specifically increased 0.8% month-over-month, the highest level since February 2018.
Existing home sales or resales make up approximately 90% of all real estate transactions. In September, existing home sales fell 2.2% month-over-month to a seasonally-adjusted annual pace of 5.38 million. Annually, however sales are up 3.9%. Lower mortgage rates have spurred some home buying activity, but buyers are competing over limited for-sale inventory.
Low mortgage rates continue to incentivize buyers, but many markets are dealing with inventory constraints. Buyers looking for a home this winter should get preapproved before they start shopping. Mortgage preapproval will help you make a stronger offer and expedite the mortgage process once you’ve found a home.