Home Builder Sentiment Highest in Five Months
Component readings used for calculating Housing Market Index readings also rose in October. Builder sentiment for current market conditions gained five points for a reading of 75. The index reading for builder perception of market conditions in the next six months also rose five points to an October reading of 78.
Builder sentiment for home buyer traffic in new home developments rose one point to 48. Buyer traffic readings seldom exceed a Home Builder Index reading of 50.
NAHB Chairman Granger Mc Donald said builders were recovering from the initial shock of damage caused by hurricanes, but this was prior to numerous wildfires adding to demand for contractors and home builders.
National Disasters Add to Ongoing Materials and Labor Shortages
Factors contributing to stronger builder sentiment included an industry concentration of building homes for purchase instead of multifamily rental projects. Single-family homes have been in short supply in recent years and building more homes is the only remedy for a market skewed in favor of sellers and rapidly rising home prices fueled by high buyer demand and few choices available to buyers.
Recent hurricane damage is likely to raise materials prices and worsen labor shortages; Widespread damage caused by wildfires in California is expected to increase demand for contractors and skilled laborers as they work to repair and rebuild homes and buildings ruined in storms and fires.
Regional Readings Mixed
Three-month rolling averages of builder sentiment for regions tracked by NAHB were mixed. In the Northeast, builder sentiment rose one point to 50. The South gained two points for a reading of 68. The reading for builder sentiment in the South was unchanged at 63; the reading for the West was also unchanged at 77.
Winter weather and challenges caused by higher demand for services against rising materials costs and ongoing labor shortages can be expected to challenge builders, but the need for new housing caused by multiple national disasters will likely create many new jobs for builders.
Current Servicemember or Veteran? 4 Reasons Why a VA Home Loan Is an Excellent Choice
Are you current or former member of the US military service who is looking to buy a new home? If so, you will be pleased to know that there are some special mortgage programs that are open to you. Let’s take a look at five reasons why a mortgage backed by the Department of Veterans Affairs is an excellent choice when buying your new home.
You Can Borrow Up To 100% Of The Home’s Value
You read that correctly! VA-backed mortgages are available to you even if you choose to put no money towards your down payment. This can be a huge benefit for those individuals and families who are looking to buy a new home but don’t have a large chunk of cash on hand to fund the down payment. Instead, you can work with your VA mortgage advisor to get financing for the entire purchase price of your home.
You Can Qualify For A ‘Jumbo’ Loan
Depending on the real estate market in your city, the size of home you need and how luxurious you want it, you may need a larger mortgage. The great news is that there are ‘jumbo’ options available with VA-backed home loans. In some cases, you may qualify for over $1 million in mortgage financing, which is likely to put most homes in your area within reach.
You Can Avoid Mortgage Insurance Fees
Home buyers using a conventional mortgage with less than 20 percent down are typically required to buy private mortgage insurance or “PMI.” However, this is not a requirement with VA-backed mortgages. If you qualify for a VA home loan, this can save you a significant amount of money over the loan’s term.
You Can Accelerate Your Payments At No Cost
If you decide that you want to pay your VA mortgage off a bit faster by accelerating your payments, you can do so without incurring fees or penalties. For example, if you are gifted a large sum of money or have a significant income tax return, you can contribute that amount directly against your mortgage.
These are just a few of the many great reasons to explore using a VA-backed mortgage to fund your next home purchase. For more information about VA home loans and to see if you qualify, contact your trusted mortgage professionals today.
What’s Ahead For Mortgage Rates This Week – October 16, 2017
Last week’s economic reports included minutes of the Fed’s Federal Open Market Committee meeting held in September along with releases on inflation and weekly reports on mortgage rates and new jobless claims.
FOMC Meeting Minutes Indicate December Rate Hike is No Sure Thing
According to minutes for the September 19 and 20 meeting of the Federal Reserve’s Federal Open Market Committee, the Fed has adopted a wait-and-see posture concerning a possible rate hike at December’s meeting. Although analysts previously indicated that additional rate hikes were expected by the end of 2017, the Fed chose not to raise the federal funds rate in September.
Hurricanes Harvey and Irma Impact Industrial Production
Hurricane damage was expected to slow industrial production in the short term. The impact of hurricane damage in Texas and Fl0rdia are expected to be short term, but the full impact of the two hurricanes had not been fully assessed at the time of the FOMC meeting.
Labor and real GDP readings rose, but the year-over-year reading for inflation was lower than the two percent inflation rate set by the Fed as a positive economic indicator. The Fed’s dual mandate also includes achieving maximum employment as measured by the national unemployment rate. The Fed originally set a goal of 6.50 percent unemployment in the immediate aftermath of the recession, but the national unemployment rate has exceeded expectations and currently hovers near 4.30 percent. Strong labor markets help propel renters into housing markets as they have more confidence in maintaining long-term employment.
Mortgage Rates, New Jobless Claims
Mortgage rates rose last week. Freddie Mac reported an average rate of 3.91 percent, which was six basis points higher than for the previous week. Rates for a fifteen-year fixed rate mortgage also rose by six basis points to 3.21 percent. The average rate for a 5/1 adjustable rate mortgage dipped two basis points to 3.16 percent. Discount points averaged 0.50 percent for fixed rates and 0.40 percent for a 5/1 adjustable rate mortgage.
New jobless claims fell to 243,000 as compared to expectations of 258,000 claims and the prior week’s reading of 260,000 first-time jobless claims filed.
What‘s Ahead
This week’s scheduled economic readings include the National Association of Home Builders Housing Market Index, Commerce Department reports on housing starts and building permits issued. Weekly readings on mortgage rates and new unemployment claims will also be released.
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