The National Association of Home Builders reported This Week in Real Estate that homebuilder confidence in June realized the largest monthly increase ever as single-family permits increased nearly 12% in May. In addition, purchase applications increased for the ninth consecutive week reaching the highest level in more than 11 years. Below are a few newsworthy events from the third week of June that influence our business:
Purchase Applications Reach Highest Level in Over 11 Years. A seasonally adjusted index measuring purchase applications jumped 8% last week, according to a report from the Mortgage Bankers Association. While the week prior saw the seasonally adjusted index rising to its highest level since January, this week the MBA reported the highest level in over 11 years. Just as mortgage applications increased, applications for refinancing’s also rose 10% from the week prior, signaling the second gain for refinancing’s in two months. “The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. Applications for purchase mortgages gained for the ninth consecutive week.
Homebuilder Sentiment Posts Biggest Monthly Surge Ever, a Sign Housing is Rebounding From Coronavirus. Builder sentiment jumped a striking 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index. Any reading above 50 indicates a positive market. In April, it plunged a record 42 points to 30. Mortgage applications to purchase a newly built home jumped 10.9% annually in May, according to the Mortgage Bankers Association. Of the homebuilder index’s three components, current sales conditions jumped 21 points to 63. Sales expectations in the next six months rose 22 points to 68. Buyer traffic more than doubled from May to June, from 22 to 43. Regionally, builder sentiment in the Northeast surged 31 points to 48, and 20 points to 62 in the South. In the Midwest it rose 19 points to 51, and in the West it rose 22 points to 66.
Gain For Single-Family Permits Points to Building Growth. Single-family housing starts were flat in May, albeit off an upwardly revised estimate for construction in April. However, the turning point for the market was found in the permits data. Consistent with recent gains in the NAHB/Wells Fargo Housing Market Index (HMI), single-family permits increased almost 12% in May. Total permits for single-family homes issued in 2020 on a year-to-date basis are 1.8% than the first five months of 2019. An increase in the pace of permits signals gains for single-family starts ahead. As an indication of how strong the start was for single-family construction in 2020, single-family starts on a year-to-date basis are down just 2.4% relative to the comparable 2019 totals.