Homebuilder sentiment jumps in February by biggest amount in a decade
Confidence among US homebuilders jumps as mortgage rates fall
US economy in a ‘unique period’ for housing sector: Michael Kantrowitz
Piper Sandler chief investment strategist Michael Kantrowitz shares his 2023 market outlook ahead of the January inflation data after futures data signals a continued rally.
Confidence among builders in the U.S. housing market increased more than expected in February as a recent decline in mortgage rates helps to stoke buyer demand.
The National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, rose 7 points to 42, the highest reading since September and the largest one-month gain since June 2013.
Any reading above 50 is considered positive; prior to 2022, the gauge has not entered negative territory since 2012, excluding a brief – but steep – drop in May 2020.
The index has fallen to half of what it was just one months ago, when it stood at 81, although it has increased from a low of 31. It peaked at a 35-year high of 90 in November 2020, buoyed by record-low interest rates at the same time that American homebuyers – flush with cash and eager for more space during the pandemic – started flocking to the suburbs.
February's reading was above the median expectations among economists for an increase to 37 from the previous reading of 35.
ECONOMIST WHO CALLED 2008 HOUSING CRASH PREDICTS ANOTHER 15% DROP IN HOME PRICES
Single family home under construction with equipment in front, Berlin, N.J., Dec. 25, 2022 (Fox News)
The interest rate-sensitive housing market has borne the brunt of the Federal Reserve's aggressive campaign to tighten policy and slow the economy.
Policymakers already lifted the benchmark federal funds rate eight consecutive times – well into restrictive territory – and have indicated they plan to continue raising rates higher this year as they try to crush inflation that is still running abnormally high.
Still, demand has shown early signs of returning as mortgage rates continue to fall from a record high of 7.08% in November.
The average rate for a 30-year fixed mortgage dropped to 6.12% last week, according to data from mortgage lender Freddie Mac. However, that remains significantly higher than just one year ago, when rates hovered around 3.69%.
INFLATION DENTS MORTGAGE APPLICATIONS
Homes under construction in a 55+ community, Berlin, N.J., Dec. 25. 2022 (Fox News)
Mortgage applications are up 28% from early November, according to Redfin, which has sent the typical homebuyer's mortgage payment down about 10% – or roughly $180 – since the fall.
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Even with higher interest rates putting homeownership out of reach for millions of Americans, prices are still steeper than just one year ago. The median price of an existing home sold in December was $372,700, a 2% increase from the same time a year ago, according to a report released last week by the National Association of Realtors.
This marks the 130th consecutive month of year-over-year home price increases, the longest-running streak on record.