Tuesday, July 25, 2017

Although Still High, Housing Market Index Decline

Housing Market Index

Home builders continue to be less excited about the future of housing than earlier this year. The housing market index declined to a lower than expected level of 64 in July. Although still very high, this is the lowest level since November of last year.

The less than highly optimistic sentiment is evenly divided among the 3 components that make up the index. Future sales still lead the index at a level of 73 followed by present sales at 70. Traffic is where the concern is coming from. The traffic level of 48 is below the breakeven number of 50, and is the second month in a row below this benchmark.

Mortgage Bankers Association Loan Application Weekly Data

Application direction reversed course after accounting for the prior week’s July 4th holiday adjustment. For the week ending July 14th, applications for home purchases increased 1.0 percent. Refinances, jumped 13.0 percent erasing the prior week’s decline of the same amount.

Purchase applications are up 7.0 percent from the same time last year. Refinances represent 44.7 percent of mortgage activity, which is up 2.6 percent from the prior week. There continues to be talk that the fall may be a stronger housing market than normal due to the abnormally slow Spring market due to limited inventory.

Housing Starts

This data has been moving up and down over the last few months. This trend continued with a positive report for the month of June. Housing starts and permits were both higher. Expectations were for the pace of annualized starts to come in at 1.200 million. The actual report delivered 1.215 M, plus the prior month was revised higher by 300,000. Translating all this to percentages, housing starts increased 8.3 percent and permits jumped 7.4 percent.

Starts for single-family homes rose 6.3 percent while multi-family jumped 13.3 percent. Surprisingly is that the Northeast led the country followed by the Midwest. The West was up slightly and the South was down significantly.

The housing market will get the rest of the data it needs to better indicate the future of housing next week. With three major housing reports, investors will be paying close attention.

Next week’s potential market moving reports are:

· Monday July 24th – Existing Home Sales
· Tuesday July 15th – FHFA House Price Index, S&P Corelogic Case-Shiller HPI
· Wednesday July 26th - MBA Mortgage Applications, New Home Sales, FOMC Announcement
· Thursday July 27th - First Time Jobless Claims, Durable Goods Orders
· Friday July 28th - GDP

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (707) 455-7070.

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