Home Builder Confidence Rose For The Second Consecutive Month. The U.S. Department of Housing and Urban Development and the U.S. Census Bureau reported This Week in Real Estate that single-family housing production exceeded one million units for the second consecutive month in December. The annualized rates for single-family starts (1.03 million units) and single-family permits (994,000) in December increased by 15.8% and 32.9%, respectively, compared to the previous year. Home builder confidence rose by 7 points in January for the second consecutive month, attributed to mortgage rates staying below 7% for the past month. The Mortgage Bankers Association noted a 9% week-over-week increase in purchase applications due to a decline in rates. Below are a few newsworthy events from the third week of January that influence our business: SINGLE-FAMILY STARTS DOWN IN DECEMBER BUT POST SOLID SHOWING. In a sign that lower mortgage rates continue to boost the housing market, single-family production surpassed the million mark for the second straight month in December. Single-family starts decreased 8.6% to a 1.03 million seasonally adjusted annual rate following an unusually strong reading the month before but are up 15.8% compared to a year ago. Single-family starts in 2023 totaled 945,000, down 6% from the previous year. Single-family permits increased 1.7% to a 994,000-unit annualized rate and up 32.9% compared to the previous year. Read the full story here. MORTGAGE DEMAND SURGES MORE THAN 10% AS LOWER INTEREST RATES LURE HOMEBUYERS. Another drop in mortgage interest rates caused a run on loans last week. Total mortgage application volume jumped 10.4%, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. “Mortgage rates declined across all loan types as Treasury yields moved lower last week on incoming inflation data, which helped to support a rise in mortgage applications,” said Joel Kan, vice president and deputy chief economist at the MBA. Applications for a mortgage to purchase a home rose 9% for the week. Mortgage rates were about half a percentage point (52 basis points) higher one year ago. Lower rates are also giving some current homeowners an opportunity to save money. Applications to refinance a home loan increased 11% compared with the previous week and were 10% higher than the same week a year ago. Read the full story here. BUILDER SENTIMENT SURGES ON FALLING INTEREST RATES. Mortgage rates well under 7% over the past month have led to a sharp increase in builder confidence to begin the new year. Builder confidence in the market for newly built single-family homes climbed seven points to 44 in January, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This second consecutive monthly increase in builder confidence closely tracks with a period of falling interest rates. Mortgage rates have decreased by more than 110 basis points since late October per Freddie Mac, lifting the future sales expectation component in the HMI into positive territory for the first time since August. All three of the major HMI indices posted gains in January. The HMI index charting current sales conditions increased seven points to 48, the component measuring sales expectations in the next six months jumped 12 points to 57 and the component gauging traffic of prospective buyers rose five points to 29. Looking at the three-month moving averages for regional HMI scores, the Northeast increased four points to 55, the South increased two points to 41, the West registered a one-point gain to 32 and the Midwest held steady at 34. Read the full story here.
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