Blog posted On July 16, 2018
With no significant mortgage rate movement to report, rates are holding steady this month. The National Association of Home Builders (NAHB) will release its housing market sentiment index on Tuesday. Housing starts and building permits are scheduled for release on Wednesday, along with the Mortgage Bankers Association (MBA) weekly mortgage application survey.
The NAHB housing market index is based on a survey of home builders’ perceptions on current sales conditions, outlook for the next six months, and buyer foot traffic. Sustained buyer demand has kept builders especially busy this summer, and the housing market index has hit several high points in the past year. In June, builder sentiment fell slightly to a level of 68, but any reading above 50 is considered positive. Each component lost one point, current sales conditions dropped to 75, expectations for the next six months dropped to 76, and buyer foot traffic dropped to 50. Concern around Canadian lumber tariffs and materials costs contributed to the lower reading. Still, this season has been strong for home buying and selling.
Mortgage activity picked up for the week ending 7/6, according to the MBA weekly mortgage application survey. New purchase applications are up 7.0% and refinance applications declined 4.0%, for a composite increase of 2.5%. Refinance activity is expected to contract as mortgage rates gradually rise.
Housing starts track ground broken on residential projects and building permits track permits issued. In May, housing starts surged, up 5.0% month-over-month to a seasonally adjusted annual rate of 1.350 million, an 11-year-high. Building permits declined, however, down 4.6% month-over-month to a seasonally adjusted annual rate of 1.301 million. Single-family housing starts specifically reached the highest level of the recent cycle. Low inventory and continued buyer demand are likely to propel these gains.
Home buyers and sellers have had an especially busy summer with limited for-sale inventory. Most sellers are receiving multiple offers on their homes. Buyers looking to stay competitive in today’s market should get preapproved for mortgage financing before they start shopping. Mortgage preapproval shows the seller you have already started the home financing process and can ensure a faster closing than a buyer who has not started the mortgage process.