May 15 2024

Builders’ confidence in the new home market retreated this month , the first decline since last November. The National Association of Home Builders (NAHB) reports that the NAHB/Wells Fargo Housing Market Index (HMI) lost 6 points from its April level, falling to 45. Derived from a monthly survey that NAHB has been conducting for more than 35 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor” and asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” A score above 50 for the HMI or any of its components indicates that more builders view sales conditions as good than poor. All three HMI component indices declined decisively in May. The HMI index charting current sales conditions in May fell 6 points to 51, the component measuring sales expectations in the next six months fell 9 points to 51 and the gauge charting traffic of prospective buyers declined 4 points to 30. NAHB economist Robert Dietz stated that the reason for the decline is the persistently high mortgage interest rates which have remained above 7 percent for the last four weeks. Dietz said, “The market has slowed since mortgage rates increased and this has pushed many potential buyers back to the sidelines. A lack of progress on reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment. The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing.”

May 15 2024

Lower interest rates gave a lift to refinancing activity for the second week but failed to do the same for those financing home purchases. The Mortgage Bankers Association said its Market Composite Index, a measure of mortgage loan application volume, increased 0.5 percent on a seasonally adjusted basis during the week ended May 10. On an unadjusted basis, the Index increased 0.3 percent compared with the previous week. The Refinance Index rose 5.0 percent week-over-week and was 7.0 percent higher than the same week one year ago. Refinancing accounted for 32.0 percent of total applications, up from 30.6 percent the prior week. [refiappschart] Applications for home purchase financing fell back 2.0 percent on both an adjusted and unadjusted basis. The unadjusted index was 14.0 percent lower than the same week in 2023.   [purchaseappschart] “Treasury yields continued to move lower last week and mortgage rates declined for the second week in a row, with the 30-year fixed rate down 10 basis points to 7.08 percent, the lowest level since early April,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The decline in rates led to a small boost to refinance applications, including another strong week for VA refinances. However, the overall level of refinance activity remains low. Purchase applications decreased, driven largely by a 9 percent drop in FHA purchase applications. Conventional home purchase applications were down around one percent. 

May 08 2024

Lower interest rates allowed mortgage activity to rise modestly during the week ended May 3. It was the first increase in three weeks. The Mortgage Bankers Association said its Market Composite Index, a measure of the volume of mortgage applications, rose 2.0 percent on a seasonally adjusted basis compared to the prior week and 3.0 percent before adjustment. The Refinance Index increased 5.0 percent from the prior week but was 6.0 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 30.6 percent of total applications from 30.2 percent the week before. [refiappschart] The Purchase Index ticked up 2.0 percent on both an adjusted and unadjusted basis but was still 17.0 percent lower than the same week in 2023. [purchaseappschart] “Treasury rates and mortgage rates fell last week on the news of a slowing job market, with wage growth at the slowest pace since 2021, and the Federal Reserve’s announced plans to ease quantitative tightening in June and to maintain its view that another rate hike is unlikely. The conventional 30-year rate dropped 11 basis points, and the FHA rate fell 17 basis points to 6.92 percent, back below 7 percent for the first time in three weeks,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Mortgage applications increased for the first time in three weeks, with refinances up 5.0 percent. Even with the increase, which included a 29 percent jump in VA refinances, refinance application volume remains about 6 percent below last year’s already low levels.”