Builder Confidence Reaches 35-Year High

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The index measuring home builder confidence has risen to its highest score ever this month and Fannie Mae predicts This Week in Real Estate that mortgage volume will reach an all-time high of $3.9 trillion this year. Below are a few newsworthy events from the third week of September that influence our business: 

Builder Confidence Reaches 35-Year High in September. The National Association of Home Builders and Wells Fargo Housing Market Index rose five points to 83 in September – the highest score the series has seen since its inception 35 years ago, according to a release from NAHB on Wednesday. In September, all HMI indices, including current sales conditions, sales expectations and traffic of prospective buyers, reported their highest readings ever, the release said. Regionally, the West continued to see the greatest confidence in the three-month moving averages – jumping seven points to 85.  

Mortgage Lending Volume in 2020 Likely to Break Records. Fannie Mae, the world’s largest mortgage financier, said mortgage lending this year probably will reach an all-time high of $3.9 trillion. The dollar-volume record will be boosted by $2.4 trillion in refinancing’s, the highest level since 2003 and more than double the level seen in 2019, the mortgage giant said in a forecast on Tuesday. The low rates likely will boost the sales of new houses to 777,000 this year, a gain of 14% from 2019, the forecast said. Sales of existing homes probably will total 5.3 million, down 0.4%, Fannie Mae said. That’s an improvement from the drop of 4.5% the mortgage company forecast last month. The annual average U.S. rate for a 30-year fixed mortgage will be 3.1% in 2020 and 2.7% in 2021, the forecast said, matching Fannie Mae’s prior monthly projection. Both would be the lowest annual averages on record.

Single-Family Starts to Expand in August. Single-family starts showed continued growth in August but overall housing production fell 5.1 percent to a seasonally adjusted annual rate of 1.42 million units due to a double-digit percentage decline in multifamily production, according to data from the U.S. Housing and Urban Development and Commerce Departments. The pace of single-family starts in August was the highest production rate since February. Single-family starts increased 4.1 percent to a 1.02 million seasonally adjusted annual rate. The August reading of starts was consistent with surging builder confidence, as single-family building rose to meet rising buyer traffic, supported by low-interest rates. However, builders continue to face concerns in terms of rising lumber prices and supply chain shortages of other building materials. As an indicator of the strength of the housing rebound, there are now 521,000 single-family homes under construction. This is 1% higher than a year ago.

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