Lee Morof's Real Estate Blog

Last week’s economic reporting included readings from the National Association of Home Builders on housing markets, and Commerce Department readings on housing starts and building permits issued. Data on sales of previously-owned homes were also released. Weekly readings on mortgage rates and jobless claims were also released.

NAHB Housing Market Index Rises in October

The National Association of Home Builders reported an index reading of 85 for their Housing Market Index in October. This was the third consecutive month the HMI had a record reading and was the second consecutive month the index achieved readings over 80. Readings over 50 indicate that most home builders are confident about housing market conditions.

Component readings of the Housing Market Index also rose in October. Builder confidence in current housing market conditions rose two points to 90. Builder confidence in housing market conditions over the next six months rose three points to an index reading of 88, and builder confidence in buyer traffic in single-family housing developments was unchanged at an index reading of 74. Until recently, buyer traffic readings typically remained below 50.

Regional confidence readings were mixed; builder confidence in the Northeast rose by seven points to an index reading of 88. Builder confidence also rose by seven points in the West but was one point lower in the Midwest with a reading of 77. Builder confidence was two points lower in the South with an index reading of 83.

Commerce Department Reports Increases in Housing Starts and Building Permits

Housing starts and building permits issued rose in September; housing starts rose to a seasonally-adjusted annual pace of 1.415 million starts. Analysts expected a reading of 1.45 million housing starts based on August’s reading of 1.388 million new single-family homes started.

Building permits issued also rose in September with 1.553 million permits issued on a seasonally-adjusted annual basis and exceeded August’s reading of 1.476 million permits issued and 1.518 million permits expected.

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages fell by two basis point s to 2.80 percent; mortgage rates for 15-year fixed-rate mortgages averaged 2.33 percent and were two basis points lower. The average rate for 5/1 adjustable rate mortgages fell by three basis points to 2.87 percent. Discount points averaged 0.60 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Initial jobless claims fell to 787,000 new claims filed as compared to the prior week’s reading of 842,000 new claims filed. Last week’s reading for all initial claims filed fell below 800,000 claims for the first time since the pandemic started. Ongoing jobless claims also fell last week with 8.37 million continuing claims filed as compared to 9.40 million continuing jobless claims filed in the prior week.

Sales of previously-owned homes rose in September at a seasonally-adjusted annual rate of 6.54 million sales. Analysts expected 6.36 million sales based on August’s reading of 5.98 million sales. Low mortgage rates and demand for homes continued to boost home sales.

What’s Ahead

Readings on new and pending home sales, Case-Shiller Home Price Indices, and consumer sentiment will be released this week. Weekly readings on mortgage rates and jobless claims will also be published.

Last week’s economic reporting included readings on inflation,  job openings, a speech by Fed Chair Jerome Powell on the economy, and the latest Consumer Sentiment Index from the University of Michigan. Weekly reports on new and continuing jobless claims and mortgage rates were also released.

Hiring Surge and Job Separations Ease in August

The U.S. Department of Labor reported fewer job openings in August with 6.49 million job openings reported as compared to July’s reading of 6.70 million jobs available. Analysts noted that this indicated a slowdown in hiring after businesses re-opened when COVID-19 restrictions lapsed. Job separations, which include quits, layoffs. and terminations were also lower with 4.50 million job separations reported in August as compared to 4.99 million separations reported in July.

Fed Chair Says Economy Needs More Fiscal Support

Federal Reserve Chairman Jerome Powell said that the U.S. economy could use more support in a speech made to members of the National Association for Business Economics. Mr. Powell said, “Too little support would lead to a weak recovery, which would lead to  creating unnecessary hardships for households and businesses.”

Mr.Powell said that if too much assistance was provided, it would not go to waste; he also said that the economic recovery would be stronger and move faster if monetary policy and fiscal policy continue to work side by side to support the economy until it is clearly out of the woods. Forecasts of increased COVID-19 cases during fall and winter indicate the importance of additional economic relief measures.

Mortgage Rates Little Changed; as Jobless Claims Fall

Freddie Mac reported incremental changes in average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 2.87 percent and were one basis point lower. The average rate for 15-year fixed-rate mortgages was one basis pint higher at 2.37 percent. The average rate for 5/1 adjustable rate mortgages fell by one basis point to 2.89 percent. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.20 percent.

New jobless claims fell to 840,000 claims filed as compared to 849,000 initial claims filed in the prior week. Continuing jobless claims also fell last week. 10.98 million continuing jobless claims were filed as compared to the prior week’s reading of 11.98 million ongoing jobless claims filed.

What’s Ahead

This week’s scheduled economic reports include readings on inflation, retail sales, and consumer sentiment. Weekly readings on mortgage rates and jobless claims filed will also be released.