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September 23, 2019
Physicians: Homebuilders are feeling better about the housing market than they have all year
Homebuilder confidence came in at 68 points in September, rising from August’s upwardly revised reading of 67, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
According to the index, September’s level now marks the highest reading since October of last year.
“Low interest rates and solid demand continue to fuel builders’ sentiments even as they continue to grapple with ongoing supply-side challenges that hinder housing affordability, including a shortage of lots and labor,” NAHB Chairman Greg Ugalde said.
In September, the index measuring current sales conditions rose from 73 to 75 points, while buyer traffic remained unchanged at 50. However, expectations over the next six months fell a single point to 70.
“Solid household formations and attractive mortgage rates are contributing to a positive builder outlook,” NAHB Chief Economist Robert Dietz said. “However, builders are expressing growing concerns regarding uncertainty stemming from the trade dispute with China. NAHB’s Home Building Geography Index indicates that the slowdown in the manufacturing sector is holding back home construction in some parts of the nation, although there is growth in rural and exurban areas.”
That being said, the three-month moving averages for regional HMI scores show the Northeast grew from 57 to 59 points, the South moved one point from 69 to 70, the West increased two points to 75 and the Midwest held steady at 57 points.
Source: HousingWire | Alcynna Lloyd
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Higher Mortgage Rates Didn’t Deter Purchase Loan Activity
There was a jump in purchase mortgage applications during the week ended September 14 even as interest rates moved higher. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of applications volume, ticked down 0.1 percent on a seasonally adjusted basis, as the increase in its Purchase Index offset a significant decline in refinance activity. The Index was up 10 percent on an unadjusted basis, bouncing back from a 9 percent decline the prior week which was shortened by the Labor Day holiday.
The Purchase Index increased 6 percent on a seasonally adjusted basis, posting its third consecutive week of gains. The unadjusted index was 16 percent higher than the week before and up 15 percent compared to the same week in 2018.
Applications for refinancing eased back, its index reflected a 4.0 percent decline from the prior week. But given the surge in refinancing earlier in the year, the Refinancing Index is still 148 percent higher than at the same time in 2018. The share of total applications that were for refinancing also retreated, decreasing to 57.9 percent from 60.0 percent the previous week.
“The jump in U.S. Treasury rates at the end of last week caused mortgage rates to increase across the board – the highest in seven weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinancing activity dropped as a result, driven solely by conventional refinances.”
Added Kan, “The purchase index increased for the third straight week to the highest reading since July. Additionally, the average loan amount on purchase applications increased to its highest level since June. This is a likely a sign that the underlying demand for buying a home remains strong, despite some of the recent volatility we have seen.”
The FHA share of total applications increased to 10.9 percent from 9.3 percent the prior week and the VA share rose to 12.7 percent from 11.9 percent. The USDA share of total applications was 0.5 percent.
Interest rates for all loan types rose on both a contract and an effective basis.
MBA’s Weekly Mortgage Applications Survey been conducted since 1990 and covers over 75 percent of all U.S. retail residential applications Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.