Recent economic reports focused on various aspects of the housing market, as well as Federal Reserve Chair Jerome Powell’s congressional testimony. Key updates included housing starts, existing home sales, mortgage rates, and jobless claims.
National Association of Home Builders Housing Market Index Shows Optimism
In June, the U.S. housing market received a boost in confidence as the National Association of Home Builders Housing Market Index revealed a five-point increase to reach a reading of 55. This surpassed the anticipated reading of 51 and exceeded May’s index reading of 50. The component readings also saw positive gains, with a five-point rise in builder confidence for current market conditions and a six-point increase for market conditions in the next six months.
The National Association of Home Builders attributed this rise in confidence to a shortage of previously-owned homes available for sale. Many existing homeowners took advantage of the low interest rates during and after the pandemic, leading them to refinance rather than purchase new homes at the current higher interest rates.
Robert Dietz, the chief economist for the National Association of Home Builders, stated that “the single-family home building sector is gradually recovering as builder sentiment continues to improve throughout the year.” Dietz also mentioned that the Federal Reserve’s approach towards the end of its tightening cycle is positive news for future market conditions, particularly regarding mortgage rates and the cost of loans for builders and developers.
This marks the sixth consecutive month of increasing home builder confidence and the 11th month since builder sentiment entered positive territory.
Mortgage Rates Experience a Decline
Freddie Mac reported a decline in average mortgage rates last week. Rates for 30-year fixed-rate mortgages dropped by two basis points to 6.67 percent, while rates for 15-year fixed-rate mortgages fell by seven basis points to an average rate of 6.03 percent.
Sales of previously-owned homes showed a slight increase, reaching a seasonally-adjusted annual rate of 4.30 million sales, exceeding the expected reading of 4.25 million sales and April’s figure of 4.29 million sales.
Upcoming Economic Updates
In the coming week, economic reporting will include readings from the S&P Case-Shiller Indices, new and pending home sales, and inflation. Additionally, there will be weekly updates on mortgage rates and jobless claims.
