Blog posted On October 19, 2020
Mortgage rates trended downward last week and continued to touch historic lows. The National Association of Home Builders (NAHB) releases the housing market sentiment index today. Housing starts and building permits are scheduled for release on Tuesday, and existing home sales will be released on Thursday.
The NAHB housing market index is based on a survey of home builders’ perceptions on current sales activity, sales expectations for the next six months, and buyer foot traffic. Any reading above 50 is considered positive. In September, the NAHB housing market sentiment index jumped to an all-time high of 83. Current sales conditions climbed to 88, sales expectations for the next six months rose to 84, and buyer foot traffic soared to 73, a record high for the index. Recent record-low interest rates and fewer available homes for sale have created ideal housing market conditions for home builders.
Housing starts track ground broken on residential projects and building permits track permits issued. Housing starts and building permits each declined from July to August. Housing starts fell 5% to a seasonally adjusted annual rate of 1.42 million. Building permits declined 1% to a seasonally adjusted annual rate of 1.47 million. However, year-over-year, building permits were about even and housing starts increased 3%.
Existing home sales or resales track the sales of previously constructed homes and make up approximately 90% of residential real estate transactions. In August, existing home sales increased 2.4% month-over-month, reaching a seasonally adjusted annual rate of 6 million. Year-over-year resales increased 10.5%. This jump in resales marked the fasted pace in 14 years.
Housing experts predict that mortgage rates will continue to be in the historically low range for the remainder of the year. As the weather gets colder, older homes become draftier. If you haven’t renovated or updated your home features in a while, it’s likely that cold air will leak into your home, causing you to crank up the heat. Instead of pouring out money on electric bills, consider talking to us about investing in a new home or a renovation of your current home.