Last week we received yet another encouraging report from the National Association of Home Builders, whose Housing Market Index (HMI) increased to a reading of 60 in July. It was the 13th consecutive month for readings over 50, which indicate that more home builders are confident about housing markets than those who are not. July’s reading was noteworthy as it was the highest reading since November 2005 and prior to the recession.
The Commerce Department also provided further evidence of stronger housing markets with reports on housing starts and building permits issued in June. Housing starts rose from May’s reading of 1.07 million to 1.17 million, which surpassed the expected reading with 1.11 million starts. May’s reading for new housing starts was revised from 1.04 million to 1.07 million on an annual basis and the highest reading since July 2007 Construction of apartments and other multifamily housing complexes are what home builders are focusing on, but single family home builders continued to remain confident as supported by the HMI.
Building permits issued in June was primarily for multi-family housing units and higher by 16.10 percent, which was the highest reading for multi-family building permits since 1990. However, housing analysts pointed out that the increase in multifamily building permits was due largely in part to the pending expiration of a tax credit for builders in New York State that was set to expire June 30.
Permits for single family homes were down 0.90 percent in June, to an annual pace of 691,000.
Freddie Mac Mortgage Rate Survey reported that average mortgage rates rose last week. The rate for a 30-year fixed rate mortgage averaged 4.09 percent and was higher by five basis points. The average rate for a 15-year mortgage was also five basis points higher at 3.25 percent. The average rate for a 5/1 adjustable rate mortgage was up by three basis points to 2.96 percent. Discount points were 0.60 percent for 15 and 30 year mortgages and 0.50 percent for 6/1 adjustable rate mortgages.
New jobless claims fell to 281,000 last week against the prior week’s reading of 296,000 new claims and an expected reading of 285,000 new jobless claims. Employment analysts said that the current reading indicates that the prior week’s spike in new unemployment claims was just a false alarm and the report was welcomed news after four consecutive week’s of increases. Seasonal anomalies and re-tooling at some auto plants were cited as causes for the prior week’s high reading. New jobless claims have remained under the benchmark reading of 300,000 since February for the longest consecutive period in 15 years.
Last week’s reports ended with the University of Michigan’s Consumer Sentiment Index, which fell from June’s reading of 96.1 to 93.3; analysts expected a reading of 95.0.
What’s Ahead for the Week?
We’ll get New and Existing Home Sales, FHFA Home Price Index and as usual FHLMC’s Mortgage Rate Survey and Weekly Jobless Claims.
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