Multi-Year Highs in Housing
The mortgage market has calmed down somewhat since last week’s reaction to the Fed meeting. Neither the Bank of Japan meeting early this week nor the recent economic data had much of an impact on mortgage rates. As a result, mortgage rates ended the week with little change.
Despite the post-election rise in mortgage rates, home builders remain very optimistic. Based on the December National Association of Home Builders (NAHB) survey, home builders are more optimistic now than they have been in over a decade. According to the NAHB, home builders are optimistic that the Trump administration will “reduce costly regulatory burdens.”
In addition, over the last couple of months, the level of single-family housing starts has risen to the highest level in years, and starts may continue to climb. Building permits for single-family homes rose in November to the highest level since 2007. This building can be expected to add to what have been very low levels of homes available for sale.
In November, closings on sales of previously owned homes increased slightly from October to the highest level since February 2007. Sales were 15% higher than a year ago. This may be a little misleading, however, as sales in November of last year were depressed by the implementation of new closing disclosure requirements. Since sales of existing homes measure closings, the results from November were not influenced much by the increase in mortgage rates seen since the election.
Source: MBS Quoteline