Market Forecast: Mortgage Apps, Construction Spending, New Home Sales
Posted On March 18, 2019
Mortgage rates have not moved drastically this month, even trending downward according to some sources. This week in housing news, US construction spending and new home sales data are finally catching up, following report release delays due to the partial government shutdown. The Mortgage Bankers Association (MBA) weekly mortgage application survey is also scheduled for release.
The MBA weekly mortgage application survey declined the week ending 3/8, after several weeks of gains. New purchase applications were down 3.0% and refinance applications were down 2.0% for a composite decrease of 2.5%. Based on the data, the average loan size for purchase applications has increased to a record high, suggesting that move-up buyers and high-end buyers made up the majority of applications.
The December US construction spending report was released last week and showed a 0.6% month-over-month drop in spending. Seasonality could be to blame, as construction activity tends to slow down during the cold winter months. Despite the month-over-month decline, annually, construction spending was up 4.1% from December 2018.
New home sales, or the sales of newly constructed homes, make up about 10% of all real estate transactions. After delays due to the partial government shutdown, new home sales improved in December, up 3.7% month-over-month to a seasonally adjusted annual rate of 621,000 units.
The biggest impediment home buyers have faced in recent years is a lack of available homes for sale. However, home builder sentiment is positive, suggesting inventory will start to be replenished. Additionally, home price appreciation has slowed, giving buyers a break on rising home prices.