Home Builder Future Sales Confidence Rises To New Highs

Home Builder Confidence Surges In May 2013

May 16, 2013  by Leave a Comment

Home builders are gaining confidence in current and future market conditions for new homes, but continue to see below-average foot traffic in new homes.

The reading for May’s National Association of Home Builders (NAHB) /Wells Fargo Housing Market Index (HMI) increased by three points to a reading of 44 as compared to April’s revised reading of 41. The HMI measures builder confidence in current sales conditions for newly built homes, buyer foot traffic in new homes and builder expectations for future sales conditions.

Builder Confidence In Future New Home Sales Highest Since February 2007

The HMI reading for current sales conditions for newly built homes rose from 44 to 48. The reading for buyer foot traffic in new homes rose from 30 to 33, and builder confidence in future sales of new homes rose from 52 to 53, which is the highest reading posted for builder expectations since February 2007.

A reading of more than 50 indicates that more builders consider housing markets good than bad.

NAHB Chairman Rick Judson noted that home builders are facing challenges including rising costs for building materials, lots and labor as supply chains recover from the recession. He also said that builders took note of “urgency” among home buyers wanting to take advantage of low mortgage rates, but who are facing a dwindling supply of available homes.

Regional Housing Market Index Unchanged Except In West

HMI readings for three of the four geographical regions used in the HMI survey of builders remained unchanged with the Northeast at 37, Midwest at 45 and South at 42.

The reading for the West declined by five points to 49, and likely reflects the shortage of building space and available new homes for sale. The regional HMI figures are calculated as a three-month rolling average.

In some areas of the West, home sellers are again receiving multiple offers for homes, a clear indication of diminishing inventories of homes for sale.

As an example, the Sacramento Bee recently reported the dilemma of builders faced with fewer available construction-ready lots alongside an increasing demand for homes. As inventories of both new and pre-owned homes shrink, demand for homes is growing as buyers take advantage of low mortgage rates.

With builders feeling confident about the future and poised to ramp up their home building efforts, it is a great time to consider buying or selling a home.

Contact your trusted real estate professional to discuss your options right away to take advantage of this exciting opportunity.

 

What’s Ahead For Mortgage Rates This Week – May 6, 2013

 

What's Ahead For Mortgage Rates This Week May 6 2013

May 6, 2013 by Leave a Comment

Mortgage rates fell last week and approached or reached record low levels.

According to Freddie Mac, the average rate for a 30-year fixed rate mortgage (FRM) fell from 3.40 percent to 3.35 percent. Average rates for a 15-year FRM moved from 2.61percent to 2.56 percent.

Average rates for a 5/1 adjustable rate mortgage (ARM) fell to 2.56 from last week’s average of 2.58 percent Discount points for last week’s mortgage rates ranged from 0.7percent for 30 and 15 year FRM loans to 0.5 percent for a 5/1 ARM.

Rock-bottom mortgage rates can offset the impact of rising home prices.

Last Week Was A Strong Showing For The US Economy

Last week’s economic news provided further indications of economic recovery, with housing related reports contributing to overall confidence in a stronger economy.

Highlights of last week’s news include:

Monday: Pending home sales moved up to 1.50 percent in March from February’s -1.07 percent. This reading also surpassed Wall Street’s forecast of 0.90 percent for March.

Tuesday: The Case-Shiller Home Price Index for February reported that the national average home price had increased by 9.3 percent year-over-year between February 2012 and February 2013. By comparison, the average national home price between January 2012 and January 2013 increased by 8.1 percent year-over-year. Rising home prices are contributing to the economic recovery, but in some areas demand for homes exceeds supply, which also contributes to rising home prices.

Wednesday: The Federal Open Market Committee (FOMC) issued its scheduled statement after its meeting concluded. Committee members noted signs of an improving economy, and cited housing markets as a leading contributor to the recovery. The FOMC statement also indicated that economic conditions were not sufficiently improved for the FOMC to change or cease the Federal Reserve’s quantitative easing policy. The Fed’s goal for its current quantitative easing program is keeping long-term interest rates including mortgage rates low.

Thursday: The weekly Jobless Claims Report brought better-than-expected news with new jobless claims coming in at 324,000, less than the expected reading of 345,000 new jobless claims and also higher than the previous report’s reading of 342,000 new jobless claims.

Friday: The Bureau of Labor Statistics issued its monthly “Jobs Report,” which consists of the Non-farm Payrolls Report and the national Unemployment Rate. Again new jobs added exceeded expectations for April with 165,000 jobs added against expectations of 135,000 new jobs added. April’s reading also surpassed the March reading of 138,000 new jobs.

The unemployment rate dropped to 7.5 percent as compared to a consensus of 7.6 percent and last month’s reading of 7.6 percent. To put this reading in perspective, the FOMC has targeted an unemployment rate of 6.5 percent as a benchmark for adjusting its current policies including quantitative easing.

What To Look For This Week

This week’s economic events include latest Jobless Claims report on Thursday. It will be interesting to see if this week’s reading will be lower than last week’s reading of 324,000 new jobless claims.

On Friday, the Federal Budget will be released; this could influence financial markets depending on what programs and services are cut or reduced.

What’s Ahead For Mortgage Rates This Week – April 8, 2013

What's Ahead This Week
 

Last week’s economic news includes several factors that drove U.S. mortgage rates lower.

The Bank of Japan announced that it would increase its purchase of bonds by $1.4 trillion over the next two years.

This news caused yields on Japanese bonds to fall, which made U.S. bonds more appealing to international investors, that in turn increased MBS prices and caused mortgage rates to fall.

Bumpy Employment Numbers Support Lower Interest Rates

Other significant economic news involves an unexpected drop in the number of new jobs created last month.

The Bureau of Labor Statistics (BLS) Nonfarm Payrolls Report issued Friday indicated that 88,000 jobs were added in March, which fell considerably short of the expected 190,000 jobs added as well as the 236,000 jobs added in February.

Average hourly earnings remained flat against February, which indicates another stall in U.S. economic growth.

Expanding employment sectors for March included professional and business services and healthcare, while retail jobs decreased.

Jobless claims increased last week in concurrence with lower than expected jobs added for March.

New jobless claims came in at 385,000 and were higher than expectations of 345,000 new jobless claims and the prior week’s jobless claims of 357,000.

The monthly unemployment rate fell from 7.7 percent to 7.6 percent, but this isn’t encouraging news.

According to the BLS, the unemployment rate fell due to workers leaving the work force instead of workers finding jobs.

Next week, Treasury Auctions will be held Tuesday, Wednesday and Thursday.

On Wednesday, the Federal Reserve will release FOMC minutes.

Fed Continues Monthly Bond Purchases

Investors and analysts review the minutes for predicting future economic developments and also for gauging the Fed’s sentiment about how or if changes should be made to the current quantitative easing program (QE).

The current QE program involves the Fed’s monthly purchase of $85 billion in bonds and MBS is intended to keep long-term interest rates including mortgage rates low.

Retail Sales will be released Friday, and as indicated by falling job numbers in the retail sectors, analysts are expecting no growth for March in either report.

Global news concerning North Korea and the European Union economic situation could also move U.S. markets up or down depending on the nature of the news.

While not encouraging in terms of an economic recovery, these events show that the recovery is proceeding with ups and downs; this doesn’t provide investors a clear picture and may cause them to seek safe haven in bonds.

The good news for homeowners is uncertainty and low expectations of the financial markets typically help keep mortgage rates lower.