Purchase Applications Fall as Mortgage Rates Rise
D.R. Horton is rolling out a new brand targeted to the first-time homebuyer. Household formation numbers have shot up in the last few months.
Spring selling season is in full swing, and investors are eager to see how the homebuilders are seeing the upcoming year.
The pending home sales index is published monthly by the NAR (National Association of Realtors). It’s considered a leading indicator for the housing market.
The report on new home sales looks at new, privately owned single-family homes sold in a month. New home sales account for one-tenth of the US housing market.
The rise in purchase applications bodes well for homebuilders including KB Homes (KBH), Standard Pacific (SPF), and Pulte Group (PHM).
The data from MBA show that the seasonally adjusted index of mortgage applications increased by 9.5% for the week ended March 20.
The sharp decline in mortgage originations during the last two quarters of 2014 is due to several reasons. The main reason is the end of the refinance boom.
A shortage in existing home inventory means fewer homes are available for sale, which could lead to higher prices if consumer demand were strong.
On an annual basis, the homeowner vacancy rate fell by 9.52% in the quarter ended December, down from 2.1% in the last quarter of 2013.
The drop in the rental vacancy rate indicates that owning a home still isn’t affordable for many people, despite the economic revival.
Spending on private construction, which accounts for more than 71.8% of all construction spending, fell 0.5% in January.
A rise in mortgage rates should signal a pickup in economic activity, higher income levels, and greater confidence among homebuyers.
Compared to 4Q 2013, homeownership rates were lower for all age groups except for those between 45 and 54.
Household formation during the last quarter of 2014 was at its highest level since 2005. So are the good times here to stay?
Privately owned housing starts saw a whopping decline of 17% in February over January, down to a seasonally adjusted annual level of 897,000.
Building permits allow us to estimate the number of new housing units that have been issued an authorization by the government during a given month.
New home sales are an important indicator for investors in the SPDR S&P Homebuilders ETF (XHB) and the iShares U.S. Home Construction ETF (ITB).
Existing home sales are currently at 4.88 million compared to 4.66 million a year ago, representing growth of 4.72%.
Reported in January 2015, the latest Pending Home Sales Index was at 104.2, up by 1.68% over the previous month and 8.4% over a year ago.
This series is focused on housing indicators. We’ll cover all the important indicators that positively or negatively affect the homebuilding industry.
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