Home Builder Confidence Rises To Highest Level Since January 2006

Home Builder Confidence Rises To Highest Level Since January 2006The National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index (HMI) rose in July.

Home builder confidence in the market for newly constructed single-family homes rose six points to a reading of 57. NAHB reports that this was the third consecutive rise in the HMI and its highest reading since January 2006.

Three components used in compiling the HMI reading include current sales, which gained five points for a reading of 60.  Confidence in prospective buyer traffic rose from 40 to 45, and sales expectations for the next six months rose from a reading of 60 to 67.

HMI: All Regions Post Gains

Regional data reflected gains in builder confidence for all U.S. geographic regions. Regional data is based on a three-month rolling average of builder confidence in each region.

The Northeast gained four points for a reading of 40; the Midwest gained eight points for a reading of 54. The South gained five points for a reading of 50, and the West gained three points for a reading of 51.

Readings of more than 50 indicate that more builders view conditions as good than poor. NAHB Economist David Crowe indicated that growing confidence is driven by factors including lower prices for building materials and more buyers vying for fewer available homes. A shortage of building space and available existing homes is improving markets for new homes.

Housing Starts Decline In June

In spite of growing home builder confidence, housing starts for June fell to their lowest level in nearly a year. Regional weather conditions contributed to the dip in housing starts, which surpassed June 2012 housing starts by 10.40 percent.

June’s housing starts fell to 836,000 on a seasonally-adjusted annual rate, and fell shy of economist’s expectation of 950,000 housing starts. Expectations were based on May’s original tally of 914,000 housing starts, which was revised upward to 928,000 on Wednesday.

Building permits for single family homes moved up by 0.60 percent to a rate of 624,000; this is the highest rate since May, 2008. A significant backlog of unused permits contributed to June’s lower number of building permits issued.

Economists are confident that the housing market continues its recovery, but may face obstacles if the government changes the mortgage interest tax deduction.

Another concern involves the pending “tapering” of the Fed’s quantitative easing program (QE). The QE program, which involves the Fed’s purchase of Treasury securities and mortgage-backed securities (MBS) was designed to support mortgage markets and also helps to keep mortgage rates low.

For specific details on local home building activity in and around Portland , please contact your trusted Portland Maine Real Estate professional today.

Home Builder Confidence Jumps By Widest Margin Since 2002

Home Builder Confidence Jumps By Widest Margin Since 2002U.S. housing markets are gaining as demand for homes exceeds available supplies in many areas. The National Association of Home Builders/ Wells Fargo Housing Market Index (HMI) for June increased by eight points over May’s reading to achieve a positive reading of 52. This last happened in August-September of 2002, when HMI monthly readings also jumped by eight points.

Any reading over 50 indicates that more builders consider housing market conditions positive than negative. June’s reading was the first time the HMI reading surpassed a reading of 50 since April 2006.

Limited Inventory Drives Sales Of New Homes

Rick Judson, NAHB Chairman, cited short supplies of existing homes as a factor driving sales of new homes. As demand for homes grows and inventories of available existing homes fall, buyers are increasingly buying new homes.

Sales of existing homes continue to be impacted by factors such as homes worth less than the mortgages held against them and sellers taking a “wait and see” attitude toward listing their homes for sale.

All three of the components of June’s national HMI gained:

  • The reading for current sales conditions rose from 48 to 56.
  • Expectations for future sales gained nine points to 61.
  • June’s reading for buyer foot traffic in new homes gained seven points for a reading of 40.

Regional Home Builder Confidence Grows In 3 Of 4 Regions

The 3-month rolling average readings for regional home builder confidence showed increases in three of four regions:

  • Northeast: Builder confidence increased by one point to 37.
  • Midwest: Builder confidence rose by one point to 47.
  • South: Builder confidence rose by four points to 46.
  • West: Builder confidence dropped by one point to 48.

High demand and a shortage lots available for building new homes contributed to the West’s slight decrease in builder confidence. Overall, increasing home builder confidence is a sign of economic recovery, but as the economy gains momentum and home prices continue rising, mortgage rates can be expected to rise as well.

Housing Starts Up 28% Annually In May

The U.S. Department of Commerce reported Wednesday that national housing starts rose by 6.80 percent from April’s revised reading. May’s reading of 914,000 housing starts was reported on a seasonally adjusted annual basis. May’s reading was 28.80 percent higher than for May 2012.

Single-family housing starts (one to four units) fell short of investor expectations of 953,000 but exceeded April’s revised reading of 856,000.

Multi-family housing starts surpassed single-family housing starts, but any additions to low inventories of single-family homes could ease the difference between high demand and low inventories of available homes. Meeting demand for homes would temper rising home prices, which could help potential buyers qualify for mortgage loans.

Japan continues to rock the markets

MARKET WRAP: The devastation in Japan continued to rock the markets today forcing investors to panic sell in the equity markets pushing the Dow Jones down nearly 300 points before paring more than half of those losses by the time the Stock markets closed at 4:00pm ET. The selling of equities lifted the Bond markets but Bonds reversed course and shed many of those gains as the day progressed, especially after the Fed was more upbeat on the economic recovery and noted commodity inflation in its FOMC statement. The benchmark 4% coupon finished at 98.88 after being as high as 99.31 up 22bp for the session. The Dow fell 137.74 to 11,855.42, the S&P 500 Index fell 14.52 to 1,281.87 while the Nasdaq dropped 33.64 to 2,667.33. Oil settled at $97.19/barrel down $4.01. Tomorrow’s data includes Housing Starts/Building Permits along with the Producer Price Index.

Maine Mortgage Market Update 11.17.2010

Mortgage bond prices opened slightly higher Wednesday morning adding to the gains seen Tuesday afternoon. Rates are finding support from bond friendly economic news released this morning.

In news released at the open, consumer prices rose 0.2% last month and the core rate, which excludes the volatile food and energy costs were unchanged. Economists expected CPI to rise 0.4% and 0.1% respectively. That data was bond friendly.

On the housing front, housing starts stood at 519k, lower than expectations for a read of 600K. This is further evidence the housing market is facing some stiff headwinds.

Traders are now waiting for stocks to begin trade at 9:30 to help gauge interest rate direction.

Events effecting the Maine Mortgage Market 11.15 to 11.19

Mortgage bond prices were lower for last week pushing mortgage interest rates higher.  The Treasury auctions were mixed with generally decent foreign demand but rather lackluster overall results. The weekly jobless claims data came in lower than expected which was not bond friendly and pushed rates considerably higher Wednesday.  The bond market was closed Thursday for the holiday, which likely contributed to the volatility with thin trading conditions surrounding shortened trading week.  For the week interest rates finished worse by about 7/8 of a discount point.

The retail sales data Monday will set the tone for trading this week.  The inflation data on Tuesday and Wednesday have the greatest potential to move the financial markets.

LOOKING AHEAD – 11.15 to 11.19

Date & Time

Retail Sales Monday, Nov. 15,
8:30 am, et
Up 0.6% Important.  A measure of consumer demand.  A smaller than expected increase may lead to lower mortgage rates.
Business Inventories Monday, Nov. 15,
10:00 am, et
Up 0.6% Low importance.  An indication of stored-up capacity.  A significantly larger increase may lead to lower rates.
Producer Price Index Tuesday, Nov. 16,
8:30 am, et
Up 0.7%,
Core up 0.1%
Important.  An indication of inflationary pressures at the producer level.  Weaker figures may lead to lower rates.
Industrial Production Tuesday, Nov. 16,
9:15 am, et
Up 0.3% Important.  A measure of manufacturing sector strength.  A lower than expected increase may lead to lower rates.
Capacity Utilization Tuesday, Nov. 16,
9:15 am, et
75% Important.  A figure above 85% is viewed as inflationary.  Weakness may lead to lower rates.
Consumer Price Index Wednesday, Nov. 17,
8:30 am, et
Up 0.3%,
Core up 0.1%
Important.  A measure of inflation at the consumer level.  Lower than expected increases may lead to lower rates.
Housing Starts Wednesday, Nov. 17,
8:30 am, et
605k Important.  A measure of housing sector strength.  Larger than expected decreases may lead to lower rates.
Leading Economic Indicators Thursday, Nov. 18,
10:00 am, et
Up 0.5% Important.  An indication of future economic activity.  A smaller increase may lead to lower rates.
Philadelphia Fed Survey Thursday, Nov. 18,
10:00 am, et
2.0 Moderately important.  A survey of business conditions in the Northeast. Weakness may lead to lower rates.

Low Rates

Mortgage interest rates remain near historic lows.  Borrowers that choose to float in this environment expose themselves to an upside risk in mortgage interest rates.  The Fed has specifically stated, “Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability.”  This means the Fed believes inflation levels should increase.  Inflation, real or perceived, generally erodes the value of fixed income securities causing prices to fall and rates to rise.  If the Fed has its way it is very possible to see mortgage interest rates increase.  However, there are no certainties even with the Fed’s stated goals.  The Fed does not directly dictate mortgage interest rates but its activities have an indirect effect on rates.

Recent history attests to spikes and drops in rates on almost a weekly basis.  Last week was a prime example.  A cautious approach to interest rate exposure is prudent.