Market Recap: Mortgage Apps Up, Housing Market Index Down, Housing Starts and Building Permits Mixed

Blog posted On January 19, 2018

Mortgage rates trended upward this week, reaching the highest average level in the past 10 months.  New purchase and refinance mortgage application submissions each increased, home builder confidence scaled back, and housing starts and building permits felt the winter freeze.

The Mortgage Bankers Association’s (MBA) weekly mortgage application survey was positive for both refinance and new purchase mortgage application submissions, for the week ending 1/12.  Though the average mortgage rate is starting to increase, new purchase applications increased 3.0% and refinance applications increased 4.0% for a composite increase of 4.1%. 

The National Association of Home Builders’ (NAHB) housing market index dropped a couple points in January, down to a level of 72, after reaching an 18-year high in December.  Any reading above 50 is considered positive. Current sales conditions and sales expectations each dropped 1 point down to 79 and 78 points, respectively.  Buyer foot traffic fell 4 points to 54.  NAHB chief economist, Robert Dietz, expects home building activity to remain strong into 2018, stating, “[as] owner-occupied household formation increases and the supply of existing home inventory tightens, we can expect the single-family housing market to make further gains this year."

After gaining in November, housing starts dropped in December, down 8.2% to an annualized rate of 1.19 million.  Building permits also fell slightly, down 0.1% to an annualized rate of 1.302 million.  Although housing starts declined, the level of building permits suggests that housing activity might regain traction soon.  Extreme weather in December may have also impacted activity. 

Typically, housing activity slows down during the winter months.  Weather can hinder construction, and home buyers may pause their home search during the holiday season.   Although the housing market index declined, it sits at the second-highest level since 2005.  The drop in housing starts may also be offset by the virtually unchanged level of building permits as mortgage activity is solid. 

Sources: Bloomberg, Bloomberg, CNBC, Mortgage News Daily