Is the worst over for the U.S. housing market? Buyer and builder confidence appear to back as housing starts surge in May, according to the latest statistics.
In May, total housing starts rose 4.3 percent to 974,000 - above the revised estimate of 934,000 for April - unit seasonally adjusted annual rate, the latest report from the U.S. Census Bureau, and U.S. Housing and Urban Development said.
The total housing starts numbers are still 23.2 percent below the rate of 1,268,000 last year, though. Meanwhile, the single-family house starts were at 675,000, up by 0.1 percent from the April revised rate of 674,000.
NAHB Chairman Dean Mon sees many positive economic indicators, including the low-interest rates, rising mortgage applications, and an uptick in demand, the NAHB Now reported. The figures shown in the May housing report agree with the NAHB/Wells Fargo builder sentiment index, which also indicated positive results. And the momentum is seen to continue as the economy reopens, NAHB Chief Economist Robert Dietz said.
Home purchase mortgage applications also surged 4 percent for the week ending June 12, 2020. The mortgage loan application volume increased on a seasonally adjusted basis by 8 percent from one week earlier. The refinance index likewise increase 10 percent compared to the previous week. The share of refinancing in mortgage activity also surged to 63.2 percent from 61.3 percent the previous week.
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The increase in purchase applications was the highest level in more than 11 years and the increase for the ninth consecutive week, MBA Associate Vice President of Economic and Industry Forecasting, Joel Kan said. Low mortgage rates also fueled the pent-up demand and return of confidence; the benchmark 30-year fixed-rate mortgage rate dropped to another record low to 3.43 percent.
Builder confidence in the newly-built single-homes market has risen in June by 21 points to 58 - readings above 50 means a positive market. The NAHB/Wells Fargo Housing Market Index measures builders' next six months' perceptions of existing single-family home sales as well as sales expectations: good, fair, or poor. Also asked in the survey is how they will rate traffic of prospective buyers: high to very high, average, or low to very low.
The regional indices posted gains in June. Here is the breakdown of the Housing Market Index per region:
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Northeast region increased 31 points to 48
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South region is up by 20 points to 62
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Midwest region jumped 19 points to 51
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West region increased 22 points to 66
Building permits for privately-owned housing units is up 14.4 percent in May compared to April rate, to a seasonally adjusted annual rate of 1,220,000 units; Also, the May 2020 rate is 8.8 percent below last year's rate of 1,338,000.
Meanwhile, housing completions dropped by 7.3 percent to an adjusted rate of 1,115,000 and were also lower by 9.3 percent compared to the May rate of 1,230,000; the April revised estimate was 1,203,000.
The May single-family housing completions posted a rate of 791,000, which is 9.8 percent lower compared to the April rate of 877,000.
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