The National Association of Homebuilders reported this week that their “Housing Market Index”, a survey among its members to quantify builder sentiment about the housing market, rose three points in May to 22. While this is still well below the 50 mark which indicates builders feel optimistic about the housing market, it is the highest reading since August of 2007. It has not been above 50 since April of 2006. Meanwhile, the Commerce Department reported that new home construction soared in April – up nearly 41% from the same moth last year. The number of starts in April was also 5.8% higher than the previous month. The number of applications for new building permits actually fell for the month - down 11.5% from March. April 2010 applications were, however, still nearly 16% higher than the same month in 2009.
Now for the latest in the soap opera that has become Rural Development. After warning for weeks that the program would be out of funds sometime in May, we were all relieved last week when USDA issued a memo saying the program had been saved and that a new 3.5% Guarantee Fee would insure the solvency of the program and that loans in the pipeline could close as scheduled. Well, the emotional roller coaster continues as late last week USDA rescinded their earlier memo saying that funds were depleted and no new commitments, even conditional commitments, could be issued at this time. This means I have four files gathering dust in Marianna and four customers unsure as when they will be able to close. I will be sure and provide an update as this drama continues to unfold.
Mortgage rates remain very attractive with the benchmark thirty-year, fixed-rate at 4.875% with no points. As I said last week, continued uncertainty surrounding the European debt situation and the slide in the value of the Euro has kept investors rattled and rates have thus improved even further. Gold prices are setting records and bond prices continue to climb and this, combined with returned volatility in the stock market, should keep up the downward pressure on rates in the short-run.