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Housing Starts and Building Permits Surge in June and Mortgage Rates Hold Steady

07/20/2015

IN THIS ISSUE

Last Week in Review: Recent readings on Housing Starts and Building Permits show that the housing sector continues to improve. Interest rates opened the week lower, then went higher and finished where they started by the end of the week.



Forecast for the Week: Sales figures for new and existing homes will shed even more light on the housing market. 

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LAST WEEK IN REVIEW

Home is where the heart is. There's a lot of heart in the housing market this summer, as that sector continues to steadily improve..

Housing Starts surged in June, increasing 9.8 percent to 1.174 million units. May's figures were also revised higher. Building Permits, a sign of future construction, surged to a near eight-year high as well. It's important to note that the increase in Housing Starts mostly came from the multifamily construction sector, which can be volatile. Ground breaking for single-family homes declined in every geographic region but the South. 


Overall, construction trends have recovered following the harsh winter earlier this year. The recent National Association of Home Builders (NAHB) Housing Market Index reading of 60 confirms this, as builder confidence has reached its highest level since November 2005. Readings over 50 show that more builders view conditions as good rather than poor. NAHB Chairman Tom Woods noted, "As we head into the second half of 2015, we should expect a continued recovery of the housing market."



However, other areas of our economy continue to struggle. Retail sales have been inconsistent from month to month. After disappointing figures in April, May's numbers rebounded, boosting hope that the U.S. economy would gather some steam. However, June's sales couldn't continue that momentum, as they declined 0.3 percent. May's figures were also revised downward. 



With the saga in Greece nearly resolved, investors should begin to get back to the fundamentals of the U.S. economy: economic data, earnings season and the specter of rising interest rates. The Fed will be closely watching housing, retail sales and other key reports this summer, as they consider when to raise their benchmark Fed Funds Rate. Weekly average 30 Year Fixed mortgage rates published as part of “Freddie Mac’s” most recent survey were still slightly above 4%.



Despite the recent volatility in the markets, home loan rates remain attractive and near historic lows. If I can answer any questions at all for you or your clients, please get in touch! I can be reached at 908-202-7293 or at michael.borodinsky@caliberhomeloans.com.

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FORECAST FOR THE WEEK

Housing reports highlight an otherwise slow week for economic data.

•Wednesday brings Existing Home Sales for June. Look for June's New Home Sales figures on Friday.

Weekly Initial Jobless Claims will be released on Thursday, as usual.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. 

When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.

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By: Michael Borodinsky

Vice President/Regional Builder Branch Manager | Caliber Home Loans

 

 

 

 

 

 

 

Call Michael: 732-382-2654

Email Michael: Michael.Borodinsky@caliberhomeloans.com

Follow Michael on Twitter: @mikeborodinksy

 

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