Market Forecast: Mortgage Apps, NAHB Housing Market Index, Housing Starts and Building Permits

Blog posted On May 13, 2019

Mortgage rates have not moved much this week and will likely stay low for the rest of the year, following the Federal Reserve’s decision to pause rate hikes.  This week, the National Association of Home Builders (NAHB) will release its housing market sentiment index.  Housing starts and building permits and the weekly mortgage application survey are also scheduled for release.  

The Mortgage Bankers Association (MBA) weekly mortgage application survey tracks week to week changes in new purchase and refinance mortgage applications.  After declining for a couple of weeks, the survey rebounded for the week ending 5/3.  New purchase application submissions increased 4.0% and refinance application submissions increased 1.0% for a composite increase of 2.7%.

The NAHB housing market sentiment index surveys the nation’s home builders on current conditions, expectations for the next six months, and buyer foot traffic.  Any reading above 50 is considered positive.  In April, the index increased marginally to a level of 63.  Current sales conditions increased to a level of 69 and buyer foot traffic increased to a level of 47, but sales expectations for the next six months declined to a level of 71.  Data shows that builders have shifted gears in recent months in an attempt to cater to the need for starter homes versus the more profitable larger homes.  With more first-time home buyers starved for inventory, home builders have had to change course to cater to buyer demand.

Housing starts track ground broken on residential projects and building permits track permits issued.  In March, housing starts dropped 0.3% month-over-month, to a seasonally adjusted annual rate of 1.14 million.  Building permits also fell, down 1.7% month-over-month to a seasonally adjusted annual rate of 1.27 million.  Although buyer demand remains strong, home builders are grappling with lack of labor and rising materials costs.

Lower mortgage rates will likely persist through the remainder of this year.  Potential home buyers or homeowners looking to refinance could benefit from these lower rates.  Even as buyers continue to compete over limited for-sale inventory, data shows that home price appreciation has slowed, giving many buyers a much-needed break. 

Sources: CNBC, CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily