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NAHB Home Builder Confidence Nears 2005 High The National Association of Homebuilders (NAHB) Wells Fargo Housing Market Index reported that homebuilder confidence in sales conditions for single-family homes declined one point to a reading of 57. The NAHB Housing Market Index measures home builder confidence based on builder opinions of current market conditions, future market conditions and buyer foot traffic in new homes.

Home Builder Confidence Stable for Seven Consecutive Months

January’s index reading of 57 was one point below December’s reading of 58. Any index reading above 50 indicates that more home builders are confident about housing market conditions than not. January’s reading was the seventh consecutive reading above 50. NAHB said that builder confidence in future market conditions slipped by four points to a reading of 60; builder confidence in current housing market conditions was unchanged at a reading of 62 and the reading for buyer foot traffic fell two points for a January reading of 44.

David Crowe, NAHB chief economist, cited improving labor markets, stronger economic conditions and higher consumer confidence as factors that contributed to January’s reading. In addition, analysts said that certain economic trends including higher rents and low mortgage rates may compel more renters to buy homes. Although pent-up demand contributed to buyer interest in recent months, restrictive mortgage credit policies are seen as a deterrent to higher sales volume. Builder confidence in home sales conditions would likely improve if the government can ease lender concerns about providing mortgages to buyers who don’t have strong credit scores.

Housing Market Index Indicates Room for Growth

In spite of strong builder confidence, there’s plenty of room for improvement in markets for new single-family homes. As of November, the sales pace for new homes was approximately 41 percent below the average pace for the last 20 years; housing starts for the same period were approximately 24 percent below the average for the prior 20 years. The Department of Commerce reported that housing starts were 24 percent below the 20 year average. This suggests that while borrowers are confident in housing market conditions overall, they may be taking a conservative approach on building new homes until more buyers enter the market.

This week’s upcoming housing-related reports will help determine the overall climate for housing market growth. Existing home sales and housing starts for December will be released along with FHFA’s home price report for November.

Whats Ahead For Mortgage Rates This Week January 20 2015 Last week’s scheduled economic news was mixed. Job openings increased and jobless claims increased, and consumer sentiment rose. Mortgage rates fell across the board. Labor market conditions improved and consumer prices fell in large part due to decreasing fuel prices. The details:

Labor Market Conditions Index Suggests Stronger Economy, Jobless Claims Jump

Positive labor market ratings continued to show evidence of strengthening economic conditions. The Federal Reserve’s Labor Market Conditions Index rose from November’s revised reading of 5.50 to December’s reading of 6.10. This index measures 19 economic indicators and rose well above its median reading of 1.90. November’s reading was the highest since May.

The Fed does not comment on month-to-month readings for this index. Job openings increased from November’s reading of 4.80 million to December’s reading of 5.00 million in according to the federal government.

Weekly Jobless Claims jumped to 316,000 as compared to the expected reading of 295,000 new claims and the prior week’s reading of 297,000 new jobless claims. Analysts said that some volatility in new unemployment claims are expected in the aftermath of the holiday season and noted that the latest reading was the highest since September.

Mortgage Rates, Retail Sales Fall

Freddie Mac reported lower average rates across the board. The average rate for a 30-year fixed rate mortgage fell by seven basis points to 3.66 percent; the average rate for a 15-year fixed rate mortgage also fell seven basis points to 2.98 percent. The average rate for 5/1 adjustable rate mortgages dropped by eight basis points from 2.98 to 2.08 percent.

Discount points for a 30-year fixed rate mortgage were unchanged at 0.60 percent, while average discount points for a 16-year mortgage dropped to 0.50 percent from the prior week’s reading of 0.60 percent. Discount points for 5/1 adjustable rate mortgages averaged 0.40 percent as compared to the prior week’s average of 0.50 percent. Lower mortgage rates help increase affordability and support home purchases by first-time and moderate income homebuyers.

Retail Sales for December dropped by -0.90 percent against expectations of -0.20 percent and November’s reading of +0.40 percent. December’s reading for retail sales except autos was lower by-0.10 percent as expected against November’s reading of +0.40 percent.

Last week ended on a positive note with the January reading for the Consumer Sentiment Index beating the expected reading of 95.0 with a reading of 98.20. December’s reading was 93.60.

What’s Ahead

This week’s economic reports include the National Association of Home Builders (NAHB) Housing Market Index, Housing Starts, The National Association of Realtors® Existing Home Sales report, FHFA Home Prices and Leading Economic Indicators. Freddie Mac’s mortgage rates reports and weekly jobless claims will be released as usual.

NAHB: Home Builder Confidence Nears 2005 High

What’s Ahead For Mortgage Rates This Week – January 20, 2015

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