Home builder sentiment increased in October to its highest level in 20 months due in part to low mortgage rates, solid job growth and a decline in new home inventory. The National Association of Home Builders Housing Market Index (HMI) jumped to 71 this month, up from 68 in September to the best levels since February 2018. Within the report it showed that the HMI Index gauging current sales conditions, sales expectations and the measure charting traffic of prospective buyers all increased during the month. NAHB Chief Economist Robert Dietz said, “However, builders continue to remain cautious due to ongoing supply side constraints and concerns about a slowing economy.”
Mortgage rates inched higher in the latest survey though they remain at three-year lows as the purchase environment in 2019 continues to be stronger than in 2018, reports the Mortgage Bankers Association. The 30-year fixed-rate mortgage rose two basis points to 3.92% in the week ending October 11, 2019 with 0.35 in points. The Market Composite Index, a measure of total mortgage loan application volume, rose 0.5%, the Refinance Index increased 3.6% while the Purchase Index fell 4.1%.
The Federal Reserve released its US Economy in a Snapshot this week revealing that single-family housing starts and permits have rebounded over the past three months. New and existing home sales rose in August. A still-strong labor market and low mortgage rates could continue to provide support to housing. In addition, consumer spending softened in August while inflation continued to remain below the Fed's target rate of 2%.