According to the U.S. Department of Housing and Urban Development This Week in Real Estate the pace of single-family starts in October was the highest production rate since the spring of 2007. As a result, homebuilder confidence has soared to a 35-year high in November. Below are a few newsworthy events from the third week of November that influence our business:
Existing-Home Sales Jump 4.3% to 6.85 Million in October. Existing-home sales continued to trend upward in October, marking five consecutive months of month-over-month gains, according to the National Association of Realtors. All four major regions reported both month-over-month and year-over-year growth. Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 4.3% from September to a seasonally-adjusted annual rate of 6.85 million in October. Overall, sales rose year-over-year, up 26.6% from a year ago (5.41 million in October 2019). “The surge in sales in recent months has now offset the spring market losses,” said Lawrence Yun, NAR’s chief economist. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.” Yun forecasts existing-home sales to rise by 10% to 6 million in 2021.
Single-Family Starts: Best Pace Since Spring of 2007. Single-family starts experienced continued gains in October, according to data from the U.S. Department of Housing and Urban Development and the Census Bureau. Single-family construction is up 8.6% year-to-date. The pace of single-family starts in October was the highest production rate since the spring of 2007. Single-family building increased 6.4 percent to a 1.18 million seasonally adjusted annual rate. The October reading of starts was consistent with surging builder confidence, as single-family construction rises to meet strong buyer traffic, supported by low interest rates, a changing geography of demand, and a growing number of sales that have not started construction. As an indicator of the strength of the housing, there are now 564,000 single-family homes under construction. This is 8% higher than a year ago, despite the declines for construction starts in the spring.
MBA Predicts Record Purchase Mortgage Volume in 2021. Although the MBA expects decreased refinancing in 2021 and a decline in overall origination to around $2.56 trillion, that would still be the second-highest origination total in the last 15 years. The rebounding economy is likely to mean higher mortgage rates, with the MBA forecasting 2.9% by the end of 2020, rising to 3.3% by Q4 2021. The MBA is forecasting a rise in purchase originations to $1.59 trillion, which would break the previous record of $1.51 trillion set in 2005. However, the MBA sees refinances decreasing to $971 billion. For 2020, the MBA is estimating $3.39 trillion in mortgage originations – the highest since 2003 and a 50% increase from 2019. That includes an expected 91.5% jump in refinance originations to $1.97 trillion – also the highest since 2003 – and a forecasted 16% rise in purchase originations to $1.42 trillion, the highest since 2005.
