Daily Spotlight

Lower Rates Lift Builders' Spirits

A half-point decline in the 30-year mortgage rate since early August and the prospect for easier money from the Fed boosted builders' confidence after a slow summer. The National Association of Homebuilders/Wells Fargo Housing Market Index rose by two points to 41 in September, ending a run of four monthly declines. A reading below 50 indicates that more builders see conditions as poor than good, so there is plenty of room for improvement. Traffic from prospective buyers and current sales conditions remain weak, but expectations for the next six months rose by four points to 53. "Thanks to lower interest rates, builders now have a positive view for future new home sales for the first time since May 2024," said NAHB Chairman Carl Harris. Housing starts in August rose 9.6% from the four-year low set a month earlier, to an annual rate of 1.36 million according to a report from the Department of Housing and Urban Development and the Census Bureau. Starts peaked at 1.8 million in April 2022, just a month after the Fed's first of 11 rate hikes. They may have bottomed in July, in anticipation of the Fed's recent 50-basis-point rate reduction. The National Association of Realtors reported that August Existing Home Sales of 3.86 million (SAAR) declined 2.5% from a month earlier and 4.2% from August 2023. On September 25, we expect the Commerce Department to report August New Home Sales of 650,000 (SAAR), little changed from 652,000 a year earlier. The S&P/Case-Shiller National Home Price Index rose 5.4% in June. We expect growth to soften to 5% for July. The Zillow Home Value Index rose by 3.3% in July and 2.9% in August. We remain bullish on the sector because demographics point to strong demand amid a decades-long shortage of affordable homes....  remain weak, but expectations for the next six months rose by four points to 53. "Thanks to lower interest rates, builders now have a positive view for future new home sales for the first time since May 2024," said NAHB Chairman Carl Harris. Housing starts in August rose 9.6% from the four-year low set a month earlier, to an annual rate of 1.36 million according to a report from the Department of Housing and Urban Development and the Census Bureau. Starts peaked at 1.8 million in April 2022, just a month after the Fed's first of 11 rate hikes. They may have bottomed in July, in anticipation of the Fed's recent 50-basis-point rate reduction. The National Association of Realtors reported that August Existing Home Sales of 3.86 million (SAAR) declined 2.5% from a month earlier and 4.2% from August 2023. On September 25, we expect the Commerce Department to report August New Home Sales of 650,000 (SAAR), little changed from 652,000 a year earlier. The S&P/Case-Shiller National Home Price Index rose 5.4% in June. We expect growth to soften to 5% for July. The Zillow Home Value Index rose by 3.3% in July and 2.9% in August. We remain bullish on the sector because demographics point to strong demand amid a decades-long shortage of affordable homes.  more

Market Podcast

Analyst
Quick Notes

Weekly Economic Commentary