The Home Buyer's Korner

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November 23rd, 2015

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What Home Buyers Need to Know for the Week of Nov 23th, 2015

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Last week’s economic events included reports the National Association of Home Builders Housing Market Index, Housing Starts and the release of minutes for the most recent meeting of the Fed’s Federal Open Market Committee.

The National Association of Home Builders report showed builder confidence dropped to a reading of 62 as compared to October’s revised reading of 65. NAHB’s assessment of housing market conditions is based on readings for three aspects of current and future market conditions. November’s reading of 67 for current housing market conditions was three points lower than October’s reading of 70. Expectations for market conditions for sales of single family homes over the next six months fell by five points in November to a reading of 70. Builders’ sentiment about prospective buyer foot traffic in new single family developments rose by one point to 48.

The U.S. Department of Housing and Urban Development and the Commerce Department showed a steep drop in multifamily production. Nationwide housing starts also fell 11 percent October 2015, but analysts cite wage growth and low unemployment figures along with high demand for homes as driving builder confidence in housing markets. This was the lowest reading since last spring, when construction was adversely impacted by flooding. September’s reading was adjusted to 1.19 million starts. Meanwhile, building permits issued rose by 4.10 percent to an annual rate of 1.15 million starts in October. While housing starts fell, permits issued rose to their highest level since 2007.

Demand for homes continued to exceed homes available for purchase, which is a driving force for builder confidence.

Regional readings provide a snapshot of regional housing market conditions on a month-to-month basis and on a three month rolling average. The monthly readings for November were lower except for the Western region, which gained one point for a reading of 77. The Northeastern region held steady with a reading of 52; the Midwest’s reading also decreased by one point to 59 and builder confidence in the Southern region fell by five points to 62.

Monthly regional readings for home builder confidence can be volatile due to regional economic conditions; the NAHB provides a three-month rolling average for its four U.S. regions and a better indicator. In November, the Northeast region reported a reading of 50 which was three points higher than October’s reading. The Midwest region was unchanged from October’s reading of 60; the South also reported no change from its October reading of 65. The Western region posted an increase of 69 to 73 over the three months between August and November.

Mortgage rates fell slightly last week, according to Freddie Mac, after a sharp increase the week before. The average rate for a 30-year fixed rate mortgage fell by one basis point to 3.97 percent; the average rate for a 15-year fixed rate mortgage fell two basis points to 3.18 percent and the average rate for a 5/1 adjustable rate mortgage was five basis points lower at 3.03 percent. Discount points averaged 0.60 percent for a 30-year fixed rate mortgage and 0.50 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.

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New jobless claims also fell last week to a reading of 271,000 as compared to expectations of 270,000 new claims filed and the prior week’s reading of 276, Lower jobless claims indicate further strengthening of labor markets, but seasonal hiring may have positively impacted the reading.

What’s Ahead for the Week?

We’ll get Existing Home Sales, the S&P Case-Shiller Housing Market Index, FHFA House Prices and New Home Sales, along with regularly scheduled reports on mortgage rates and new jobless claims.

Happy Thanksgiving everyone!.

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