The Mortgage Corner
Single-family housing construction rose in September. Though overall starts plunged what looks like a shocking 9.0 percent in September, to a 1.047 million annualized rate, said Econoday. The drop is tied entirely to the volatile multi-family component where starts fell a massive 38 percent in the month to a 264,000 rate. But the more important single-family component is up sharply in its own right, 8.1 percent higher to a 783,000 rate.
However, no problem, as multi-family construction starts were up sharply in August. But the graph really shows how far we need to catch up to prior years. There just aren’t enough affordable homes to satisfy demands for more affording dwellings, and the Fed is now hinting at a December rate hike.
What will happen to those millennials that want to buy their first home? However builder confidence is still high, according to the Wells Fargo Home Builders Index, and purchase mortgage applications are up 13 percent in a year, which may be the reason builders are still optimistic about future construction and inventories.
Builder confidence in the market for newly constructed single-family homes was down just two points to a level of 63 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
“The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB Chief Economist Robert Dietz. “Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family market in the months ahead.”So there may be a lull in sales, as the NAR’s Pending Home Sales Index of future sales is also lower. According to NAR chief economist LawrenceYun, evidence is piling up that without more new home construction the current housing recovery could stall. Housing inventory has declined year-over-year for 15 straight months; properties in August typically sold 11 days quicker than in August 20151 and after increasing 5.1 percent last month, existing-home prices have risen year-over-year for 54 consecutive months.
"There will be an expected seasonal decline in new listings in coming months, which could accelerate price appreciation and make finding an affordable home even more of a struggle for would-be buyers," added Yun.Mortgage rates have bumped up slightly, with 30-year fixed conforming rates now 3.125 percent for a 1.0 pt. origination fee, and 3.375 percent for no points in California, which is helping to boost the mortgage volume. The question then will be, who can afford to buy without more homes in the construction pipeline?
Harlan Green © 2016
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
No comments:
Post a Comment