Housing Starts Beat Expectations In August

Housing starts surprised the industry with a boost in August, though building permits lagged at their slowest pace the last two years. Starts increased 12.2% month-over-month to an annualized rate of 1.575 million units in August, exceeding market expectations of 1.445 million. This is the largest jump since March last year. But while the data may be positive, housing still faces pressure from inflated material costs and rising interest rates. Single-family starts increased by only 3.4%. The unexpected jump was propelled by a 28.6% surge in demand for buildings with five or more units, suggesting builders are betting on the hot rental market to stay. That prospect doesn’t bode well for the homebuilders. Builder sentiment dropped three points in September,…

Housing Starts Plummeted In July

Homebuilding plummeted in July as both homebuyers and sellers continue to lose confidence in the market. Housing starts fell by a shocking 9.6% to a seasonally adjusted annual rate of 1.446 million units last month, according to new data released by the Commerce Department.  This is their lowest rate since February 2021 and significantly below market expectations of 1.53 million. Last month’s revised data put starts at a rate of 1.599 million units. A drop this big suggests the housing market still has room to contract in the third quarter of this year. Ian Shepherdson of Pantheon Macroeconomics called the data “terrible” in a tweet Tuesday. Single-family starts fell 10.1%, their lowest in two years, while starts for units in…

Builder Confidence Drops, Signaling Trouble For The Housing Market

Builder confidence dropped two points in June to its lowest level since June 2020, according to the National Association of Home Builders(NAHB)/Wells Fargo Housing Market Index (HMI). The HMI asks builders for their opinions on current single-family home sales and sales expectations for the next six months, as well as rate their traffic of prospective buyers. Any number under 50 indicates that more builders view conditions as worse than better. The HMI posted a reading of 67 for the month of June. It is the sixth consecutive month of decline for the index. NAHB’s press release called it a “troubling sign for the housing market.” “Six consecutive monthly declines for the HMI is a clear sign of a slowing housing…

Single-Family Constructions Down In Suburban Markets

Construction of single-family homes fell across several market types in Q1 2022, with an especially large dip in large suburban markets, according to the National Association of Home Builder’s (NAHB) Home Building Geography Index (HBGI). Four-quarter moving average single-family growth rates in large metro suburban counties fell from 18.7% in Q1 2021 to 5.2% in Q1 2022. At the same time, multifamily construction in large metros has jumped after falling during the pandemic. Large metro core counties recovered from a negative 3.6% growth rate to a 17.4% rate. Multifamily construction was largely centered in large metro core areas (36.9% of development), followed by large metro suburbs (25.8%), small metro core areas (23.5%), and other submarkets (13.7%). “Single-family growth rates have…

Loan Applications Fall Further As Market Shows Signs Of Cooling

Mortgage loan application volume dropped another 1.2% after plunging by 11% last week, the Mortgage Bankers Association’s (MBA) weekly survey shows. The adjusted Market Composite Index, a measure of mortgage loan application volume, fell by 1.2%. The adjusted purchase index didn’t budge, moving 0%, while the unadjusted purchase index fell by 1% and was 16% lower YOY. The refinance index fell 4% and was down 75% YOY. Refinances made up 32.3% of total applications. ARM activity fell to 9.4% of total applications.  “The 30-year fixed rate declined for the second straight week to 5.46% but remains well above what borrowers were used to over the past two years. Most refinance borrowers continue to remain on the sidelines as a result,…

Builder Confidence Falls, Signaling A Market Slowdown

Builder confidence fell eight points in May, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The HMI registered a reading of 69 in May, a significant drop from April. This is the fifth consecutive month of decline and the lowest reading since June 2020. The low reading suggests that the housing market is slowing thanks to affordability challenges. “The housing market is facing growing challenges. Building material costs are up 19% from a year ago, in less than three months mortgage rates have surged to a 12-year high and, based on current affordability conditions, less than 50% of new and existing home sales are affordable for a typical family,”  said NAHB Chief Economist Robert…

Another Week Of Rate Increases

Mortgage rates inched up to an average 5.30% last week, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 5.30%. A year ago at this time, the 30-year FRM averaged 2.96%. “Homebuyers continue to show resilience even though rising mortgage rates are causing monthly payments to increase by about one-third as compared to a year ago,” said Sam Khater, Freddie Mac’s Chief Economist. “Several factors are contributing to this dynamic, including the large wave of first-time homebuyers looking to realize the dream of homeownership. In the months ahead, we expect monetary policy and inflation to discourage many consumers, weakening purchase demand and decelerating home price growth.” Affordability dropped in Q1 2022,…

Morning Roundup (4/26/2022)– Housing Bubble: Clickbait Or Is There A Bumpy Ride Ahead? 

Good Morning! Today is Tuesday, April 26. The Biden administration established a program that allows Americans to sponsor Ukrainian refugees. A New York judge held Donald Trump in contempt for refusing to turn over documents. The Boston Celtics eliminated the Brooklyn Nets in the first round of the N.B.A. playoffs. The Mortgage Note Reports Housing Bubble: Clickbait Or Is There A Bumpy Ride Ahead? Chuck Green reports trouble could be percolating in the U.S. housing market. loanDepot Shakeup: loanDepot has named Anthony Hsieh as its new Executive Chairman, while industry leader Frank Martell joins as President and CEO. Builder Profits: Builder gross profit margins fell to 18.2% in 2020, while net profits slipped to 7%, the first profit margin decline since 2008. And in other mortgage and housing news… Set To Stall: …

Builder Profits Fell In 2020, The First Drop Since 2008

Builder gross profit margins fell to 18.2% in 2020, while net profits slipped to 7%, according to NAHB Builders’ Cost of Doing Business Study. This is the first profit margin decline since 2008. The study surveyed single-family builders across the U.S. It found that builders averaged $13.7 million in revenue for the fiscal year of 2020, of which $11.2 million (81.8%) was spent on costs of sales, such as land costs and construction costs. An additional $1.5 million (11.2%) was spent on operating expenses, such as marketing, administrative expenses, and owner’s compensation.  The study notes that shutdowns related to Covid-19 played a part in the results, as well as the need to navigate work-from-home models, supply-chain disruptions, and labor shortages.…

Morning Roundup (3/2/2022)– Luxury Market, NAHB HBGI

Good Morning! Today is Wednesday, March 2. President Biden delivered a pro-democracy State of the Union speech that also touched on Covid-19 and his domestic agenda. At least 136 civilians and about 2,000 Russian soldiers have died in Ukraine. Major League Baseball postponed the start of the season because of a labor disagreement. The Mortgage Note Reports Hot Luxury Market: Demand for luxury housing rose 14.5% YOY in 2021 as the number of affluent individuals worldwide skyrocketed. NAHB HBGI: Single-family growth cooled in Q4 2021 while multifamily growth in high-density areas surged as apartment demand rises, according to NAHB’s HBGI. And in other mortgage and housing news… Labor Shortages: The construction industry needs 650,000 more workers to meet demand in 2022, according to an analysis…