Forecast Update: NAHB Market Index, Housing Starts, Mortgage Applications, Existing and New Home Sales

Weekly analysis of the economic data released during the past week, and how current economic conditions are affecting the real estate market.

Palm Coast, FL – September 24, 2010The National Association of Realtors® (NAR) Research staff now gives a weekly analysis of the economic data released during the past week, and how current economic conditions are affecting the real estate market. For daily economic forecasts, visit NAR Research’s Facebook page.

Monday, September 20, 2010
  • The National Association of Home Builders/Wells Fargo Housing Market Index stayed unchanged since last month, at 13. A reading above 50 would suggest that sales expectations as perceived as positive, however the index has not been above 50 since April 2006. The traffic of prospective buyers fell one point to 9, reflecting home buyers limited strength. The sales expectations for next six months also remained unchanged, at 18.
  • Flow of Funds data released on Friday, September 17, by the Federal Reserve indicated household wealth fell 2.8 percent in the second quarter 2010. Household net worth, which is the difference between the value of assets and liabilities, was estimated at $53.5 trillion, down $1.5 trillion from the previous quarter. This was the first decline since March 2009. Declines in the value of financial assets, particularly stocks and mutual funds, accounted for much of the decline. Stocks alone were down $1.9 trillion to $14.9 trillion.
Tuesday, September 21, 2010
  • The Census announced a 10.5 percent increase in housing starts in August. This is a strong improvement over July’s tepid rise of 0.4 percent. The bulk of growth in starts remains in the multifamily sector, but single family starts rose 4.3 percent after falling 6.7 percent in July.
  • Permits for new construction rose 1.8 percent in August after falling 4.1 percent in July, but the bulk of the improvement here also came from multifamily as single family eased 1.2 percent from July.
  • Permits on structures with 5 or more units are up 38.9 percent on a year-over-year basis compared to a 16.8 percent decline in single-family permits. Builders are likely targeting an expanded rental market.
  • Construction is historically low and will not add significantly to single family housing inventories limiting downward price pressure. However, it will add to payrolls, which is very important for a robust economic recovery and the health of the housing market. The construction industry accounts for a significant number of jobs, thus it is important that this sector get back on its feet.
  • The National Bureau of Economic Research announced yesterday that the recession ended in June 2009. The NBER looks at changes in GDP or the economy’s total production to determine when recessions have ended. While GDP is up, it has done so by extending output per worker by those who are employed. There remains a large reserve of unemployed and under employed workers and consumer confidence is low. Increases in productivity and GDP typically precede expanded hiring during an expansion. NAR is currently projecting that the unemployment rate will remain above 9 percent through 2012.
Wednesday, September 22, 2010
  • Mortgage purchase applications fell 3.3 percent for the week ending September 17th. Applications are slightly up from July and August but remain near 13-year lows. Purchase applications do not take into consideration all-cash purchases which according to the July REALTORS® Confidence Index made up 30 percent of transactions.
  • Year-over-year purchase applications were down 38 percent.
  • Refinances which fell 0.9 percent made up 81.1 percent of mortgage activity as mortgage rates remain near historic lows at an average rate of 4.44 percent for a 30-year fixed mortgage.
  • House prices declined slightly in July (0.5 percent) according to the FHFA Home Price Index released today. Prices are 3.3 percent down year-over-year. The FHFA data covers only Freddie/Fannie backed homes, and it lags NAR’s existing home sales which come out tomorrow for the month of August.
Thursday, September 23, 2010
Friday, September 24, 2010
  • New home sales were unchanged in August at a 288,000 annual unit rate and unchanged from July (revised up from 276,000).
  • The supply of homes on the market is swollen after the end of the buyer tax credit. However, newly constructed home inventory remains at historic lows.
  • Factory orders for durable goods in August dropped 1.3 percent, less than anticipated.
  • Year-on-year, durable goods in August rose 11.2 percent and excluding transportation, orders were 12.9 percent higher than one year ago.

©Copyright National Association of REALTORS®, Reprinted from with permission.
1 reply
  1. johndowsonn
    johndowsonn says:

    What is “brick-and-mortar” traditional banking ser

    I’m wondering what is “brick-and-mortar” traditional banking service?
    can any1 explain to me pls???

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