The past week was all about housing, starting with the July report for housing starts, which inched 0.2% higher to an annual rate of 1.206 million. The big news, however, came from building permits, with fell 16% in July to a 1.119 million annual rate. The results were somewhat skewed by a new real estate law in New York City that pulled permits into June at the expense of July. In breaking down the permit data, permits for multi-family homes fell a whopping 32%, while permits for single-family homes fell only 1.9% in July.
Existing home sales rose a higher-than-expected 2% in July to a 5.59 million annual rate, with a 10.3% increase in year-on-year sales. Single-family homes lead the way, rising 2.7% in the month to a 4.96 million rate, while condos, which show the most strength in the new homes market, fell 3.1%. Year-on-year, single-family existing home sales are up 11%, and condos are up 5%. Finally, the thin supply and high demand for housing lead to a boost in the median home price for July, up 5.6% to $234,000.
The current housing market index for August has risen 1 point to a very strong 61, led by the future sales component at 70, and the current sales component at 66. The report predicts that the new home sector will become an increasingly central source of strength for the economy, and builders continue to be more and more optimistic.
Curious how real estate has been doing here on the Central Coast? Check out our Central Coast and San Luis Obispo real estate updates for the first 6 months of the year HERE.
Jobless claims continue to remain at or new all-time lows, pointing to continuing improvement on the unemployment side of the labor market. Initial claims for the week of August 15 rose a slight 4,000 to 277,000, with a 4-week average of 271,500. Continuing claims, which lag by a week, dropped 24,000 in the week of August 8 to 2.254 million. The 4-week average for continuing claims showed a drop of 9,000 to 2.265 million. The fact that jobless claims are remaining so low is a good indication that employers are tending to hold on to their employees, whether they’re hiring or not.
All loan programs displayed rate increases over the past week, although most simply returned to levels that were the same or similar to rates seen two weeks prior. The 30-year fixed displayed to smallest rate increase, up only 3.1 basis points from August 12. Rates remain below year-ago levels, with the 30-year fixed at a rate of 3.875% (3.946% APR) vs. 4.125% (4.161% APR) a year ago.
Sean Becketti, chief economist for Freddie Mac, commented on the economy in relation to recent mortgage rate movement:
“Overall inflation grew an underwhelming 0.2 percent year-over-year in July, but core inflation remains steady at 1.8 percent keeping chances alive for a potential rate hike in September. Housing markets have responded positively to low mortgage rates — the 30-year fixed mortgage rate has been below four percent for five consecutive weeks. The latest NAHB/Wells Fargo Housing Market Index for August 2015 was 61, the highest level in more than nine years. One-unit housing starts in July 2015 jumped to 782,000 units, up 12.8 percent from June and up 19 percent from last year. Overall housing markets remain on track for the best year since 2007.”
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