The National Association of Home Builders Sees Positive Outlook
In July, the National Association of Home Builders (NAHB) reported a one-point gain in home builder confidence, with an index reading of 56. This surpassed analysts’ predictions of 57 and also marked a rise from June’s reading of 55. The index reading above 50 indicates that most home builders remain confident about the current U.S. housing market conditions. It’s worth noting that home builder confidence has been on the rise for the seventh consecutive month.
Mixed Component Readings
The NAHB’s Home Builder Confidence Index had mixed component readings for July. While there was a one-point increase in builder confidence in current housing market conditions, builder confidence in housing market conditions over the next six months dropped by two points. On the positive side, buyer traffic in new home developments increased by three points. This surge in buyer interest can be attributed to the shortage of previously-owned homes for sale, prompting buyers to explore new home options. Homebuilders reported that they are offering fewer buyer incentives than they did during the pandemic.
Obstacles to Builder’s Positive Outlook
Although home builder confidence remains positive, several challenges could potentially hinder its growth. Issues such as shortages of buildable lots and slim supplies of electrical transformer equipment were highlighted as potential obstacles. Additionally, mortgage rates hovering near 7 percent have raised concerns for home builders, although most prospective buyers seem to have accepted the higher rates. In related news, the Commerce Department reported 1.43 million housing starts in June, slightly below the expected reading of 1.48 million starts and May’s reading of 1.56 million housing starts.
Fewer Building Permits Issued
The number of building permits issued in June also saw a decline, with 1.43 million permits issued compared to the expected 1.48 million permits and May’s reading of 1.50 million permits issued.
Mortgage Rates and Jobless Claims Fall
Freddie Mac Reports Lower Mortgage Rates
Freddie Mac’s report indicated lower average mortgage rates for the past week. The average rate for 30-year fixed-rate mortgages fell by 18 basis points to 6.78 percent, while the average rate for 15-year fixed-rate mortgages dropped by 24 basis points to 6.06 percent.
Decrease in Jobless Claims
Jobless claims showed improvement, with 228,000 first-time claims filed, compared to the previous week’s reading of 237,000 initial jobless claims.
Upcoming Economic Reports and Federal Reserve Decision
The coming week’s economic reporting will include readings on U.S. home prices, sales of new homes, and pending home sales. Additionally, the Federal Reserve is set to publish its decision on whether to raise its key interest rate range. Following the interest rate announcement, Fed Chair Jerome Powell is expected to hold a press conference. As always, weekly reports on mortgage rates and jobless claims will be published, providing further insight into the state of the economy.