Market Recap: Builder Confidence Wanes, Mortgage Apps Mixed, Housing Starts and Building Permits Increase

Blog posted On August 17, 2018

Mortgage rates trended downward this week.  The National Association of Home Builders’ (NAHB) housing market sentiment index dropped by one point, but builders remain largely optimistic.  New purchase mortgage applications declined, and refinance mortgage applications were unchanged.

The NAHB housing market index fell to 67 in August, the lowest reading in 11 months.  However, any reading above 50 is considered positive.  According to NAHB chief economist, Robert Dietz, the decline in confidence is a result of “tariffs and the growing threat of a trade war […] affecting key building material prices, including lumber.”  Current sales conditions declined one point to 73 and sales expectations for the next six months dropped one point to 72.  Buyer foot traffic fell two points to 49.  Even as builder sentiment declines, buyer demand is strong.  The biggest challenge in today’s housing market is lack of available homes for sale.

The Mortgage Bankers Association (MBA) weekly mortgage application survey showed mortgage activity has continued to slow for the week ending 8/10.  New purchase application submissions fell 3.0% and refinance application submissions were unchanged, for a composite decrease of 2.0%. 

After last month’s declines housing starts and building permits each rebounded in July.  Housing starts improved 0.9% month-over-month to a seasonally adjusted annual rate of 1.168 million and building permits climbed 1.5% month-over-month to a seasonally adjusted annual rate of 1.311 million.  Although the figures are lower than expected, they signal more construction activity is in the pipeline.  Single-family home building has hit the highest levels since the housing boom from 2007-09, with home builders busy replenishing housing inventory.  Rising materials costs and labor shortages have hurt the construction industry, but a strong labor market and wage growth has kept buyer demand strong. 

Lack of housing inventory pushing home prices up has hurt housing affordability in many regions around the country.  Zillow reports although 70% of renters think about owning a home one day, 66% report saving for a down payment as the biggest obstruction to homeownership.  Many renters would like to become homeowners but are unaware of the 2000+ down payment assistance programs available, including HomeFundIt^TM, the down payment crowdfunding platform.  If you are interested in buying a home but have not been able to save for a down payment, consider meeting with a mortgage loan officer.  A loan officer can review your down payment assistance options and find out what will work best for your situation. 

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