Last week’s economic reports included readings from the National Association of Home Builders on housing market conditions, Commerce Department readings on housing starts and building permits issued and National Association of Realtors® reporting on sales of previously-owned homes.
The Federal Reserve canceled the scheduled meeting of the Federal Open Market Committee and Fed Chair’s press conference, but the Fed did lower its target federal funds rate early in the week. Weekly readings on mortgage rates and initial jobless claims were also released.
Builder Confidence, Housing Starts and Building Permits Decrease
Builder confidence in housing market conditions dropped two index points to 72 in March. Readings over 50 indicate that most builders are confident about housing market conditions. Component readings of the Housing Market Index were also lower.
Builder confidence in current housing market conditions fell two points to 79; builder sentiment about housing market conditions within the next six months fell four points to 75 and builder confidence about buyer traffic in new housing developments dropped one point to 56.
NAHB Chief Economist Robert Dietz said that March readings were compiled before the coronavirus outbreak and that April’s readings would show more accurate impacts of the coronavirus on builder confidence. As state and local governments begin to restrict non-essential activity, home sales and buyer traffic readings will decline.
February housing starts fell to 1.599 million starts as compared to January’s reading of 1.624 million starts; analysts expected 1.493 million housing starts for February’s report. The Commerce Department also reported lower numbers for building permits issued. 1.464 million building permits were issued in February; analysts expected 1.500 million permits issued as compared to January’s reading of 1.550 million permits issued. Analysts expect the coronavirus to cause declines in housing starts and real estate activity in general as the virus spreads.
Mortgage Rates Rise as Fed Lowers Target Federal Funds Rate
The Federal Reserve canceled the scheduled meeting of its Federal Open Market Committee after announcing its decision to lower the target federal funds rate to 0.00 to 0.25 percent.
Freddie Mac reported higher mortgage rates last week as mortgage lenders worked through a backlog of refinancing applications. Rates for a 30-year fixed-rate mortgage averaged 3.65 percent and were 29 basis points higher. 15-year fixed-rate mortgages had an average rate of 3.06 percent, which was also 29 basis points higher than in the prior week. 5/1 adjustable-rate mortgage rates averaged 10 basis points higher at 3.11 percent.
Discount points averaged0.70 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.
First-time jobless claims jumped to 281,000 initial claims last week as employers closed and citizens were encouraged to limit non-essential activities. Unemployment claims will increase as more businesses close or reduce services.
The National Association of Realtors® reported rising sales of previously-owned homes with a seasonally adjusted annual pace of 5.77 million homes sold and was the highest reading for February sales since 2007. Home sales are expected to decrease as the coronavirus advances.
Open houses and home showings will decrease as stricter efforts to contain the coronavirus occur.
What’s Ahead
This week’s scheduled economic reports include readings on new home sales, inflation and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.