These past few weeks have produced seemingly endless reports on residential construction. News about the housing market is dominating the headlines as industry experts hope each additional result will offer a hint into what’s to come. Unfortunately, the stream of data has left behind something the market is all too familiar with: an unclear picture and an uncertain future. Here are all the significant housing market reports you might have missed during the past few weeks, designated as the good, the bad, and the in-between:
Good:
April housing starts exceed expectations, soar to 7-year high
The Commerce Department offered much-needed good news on May 19, reporting April housing starts climbed to their highest level in seven years. The 1.14 million annualized rate, a 20.2% hike, far surpassed the 1.02 million median prediction forecast by economists surveyed by Bloomberg.
The positive report also noted that more building permits were issued in April than during any other month since 2008, which predicts a likely surge in activity in the coming months.
On another positive note: All regions in the U.S., except for the South, saw increases in housing starts.
New home sales rally in April
The Commerce Department — which seems to be the only agency releasing data that defied predictions in a positive way — reported on May 26 that new homes sales rebounded in April, seeing a 6.8% rise from March to a seasonally adjusted annual rate of 517,000. That number surpassed The Wall Street Journal’s prediction of a 6% bump. And year-over-year, new home sales rose 26.1%.
Experts said the strong numbers were due to a low inventory of existing homes (which, unfortunately, we’ll address later in this list), as well as employment growth and low mortgage rates.
So that’s it for the positive reports. They are outnumbered by the next two categories.
Bad:
NAHB builder confidence index unexpectedly dips
The key word for negative reports this month is "unexpected." First, the National Association of Home Builders/Wells Fargo Housing Market Index released May 18 revealed a two-point dip in builder confidence for May. That number was significantly lower than the 2-point bump economists polled by The Wall Street Journal had predicted.
So why the surprising decline? The major decreases reported in the survey were in current sales conditions, buyer traffic, and the sentiment of builders in the West.
Unexpected dip in existing home sales jeopardizes market momentum
That "unexpected" word popped up again with the National Association of Realtors’ report on May 21 revealing that April existing home sales fell 3.3% to an annual rate of 5.04 million units. That result was far lower than the prediction of economists polled by Reuters, who had in fact forecast a surge in existing home sales to a 5.24 million-unit pace.
The NAR attributed the dip to tight inventory and rising home prices. The Midwest was the only major region that saw increasing sales in April.
Mortgage applications slip for 5th consecutive week
The Mortgage Bankers Association reported on May 27 that mortgage applications fell for the fifth consecutive week, dipping 1.6% for the week ending May 22. At the same time, mortgage interest rates rose for the fourth consecutive week.
Many predict the rise in rates is resulting in more wary homebuyers, who want to wait to see if rates will drop to make a major purchase.
In-between
RealtyTrac: Foreclosure rate spike no cause for concern
RealtyTrac’s May 21 report showing an increase in foreclosure filings may represent more of a mixed bag for the market. April foreclosure filings rose 3% from March's rate and 9% from April 2014. The steep uptick was driven mainly by a higher number of bank repossessions — which occur at the final stage of a foreclosure.
RealtyTrac points to the number as a lingering result of the previous housing market struggle, rather than cause for renewed concern. Foreclosure starts, on a positive note, dipped for the fourth straight month — a fact that could foretell diminishing foreclosure activity in the future.
