Last week’s weeks economic releases included readings on the NAHB Housing Market Index, housing starts and building permits issued and consumer sentiment. Weekly readings on mortgage rates and new jobless claims were also released.
NAHB: Builder Confidence in Housing Market Holds Steady in February
The National Association of Home builders reported an index reading of 72 for its Housing Market Index in February. January’s reading was also 72; readings over 50 indicates that more builders than fewer are confident about housing market conditions.
Three readings comprising the overall NAHB HMI reading include builder confidence in current market conditions, which was one point lower in February at 78. Builder confidence in housing market conditions in the next six months rose two points to an index reading of 80.
This was the highest reading for future housing market conditions since before the recession. Builder confidence in buyer traffic in new housing developments was unchanged at 54.
Builders surveyed cited strong labor markets and short supplies of pre-owned homes as fueling confidence in current market conditions, but identified ongoing labor and lot shortages and rising materials costs as concerns for builders.
Housing Starts, Building Permits Issue Rise in January
High builder confidence was reflected in readings for housing starts and building permits issued in January. Housing starts rose to their highest level in more than 10 years. The annual pace of housing starts reached 1.326 million starts.
January’s reading exceeded expectations of 1.324 million starts and December’s reading of 1.209 million housing starts. January’s starts reflect strong builder confidence readings and may also signal future relief for short supplies of available homes and high demand for homes in many metro areas.
High demand for homes has caused rapid appreciation in home values and sidelined first-time and moderate-income buyers in areas with high home values. According to the Commerce Department, building permits issued rose to 1.396 million from December’s1.380 million starts annually.
The University of Michigan reported the second highest reading for consumer sentiment in 14 years. February’s reading of 99.9 was higher than expectations for a reading of 95.3 and January’s reading of 95.7Analysts said that recent tax cuts likely stabilized consumer outlook in spite of volatile financial markets.
Mortgage Rates, New Jobless Claims Rise
Freddie Mac reported higher mortgage rates for all three types of mortgages it tracks in its Primary Mortgage Market Survey. Rates for a 30-year fixed rate mortgage rose an average of six basis points to 4.38 percent.
The average rate for a 15-year fixed rate mortgage was seven basis points higher at an average of 3.84 percent. Rates for a 5/1 adjustable rate mortgage averaged 3.63 percent, which was six basis points higher than the prior week.
New jobless claims were higher last week with 230,000 new claims filed, which matched expectations and exceeded 223,000 new jobless claims filed the prior week.
What‘s Ahead
This week’s economic releases include readings on existing home sales along with weekly readings on mortgage rates and new jobless claims. Financial markets were closed on Monday for President’s Day.
Last week’s economic news included an encouraging report from the National Association of Home Builders, whose housing market index held steady with a reading of 60 in July. This was the 13th consecutive month for readings over 50, which indicate that more builders are confident about housing markets than those who are not. July’s reading was noteworthy as it was the highest since November 2005 prior to the recession.