Market Forecast: Housing Market Index, Housing Starts and Building Permits, and Existing Home Sales
Posted On February 15, 2021
Mortgage rates did not fluctuate much last week and continued to hover near historic lows. This week, the National Association of Home Builders’ (NAHB) housing market sentiment index is scheduled for release on Wednesday. On Thursday, the housing starts and building permits reports will be released, and on Friday the existing home sales report will come out.
The National Association of Home Builders’ (NAHB) housing market sentiment index is based on a survey of home builders’ perceptions on current sales activity, sales expectations for the next six months, and buyer foot traffic. Any reading above 50 is considered positive. In January, the housing market index fell to 83, dropping three points from December’s reading. Though January marked the second month in a row that home builder confidence declined, the reading still remains historically high.
Housing starts track ground broken on residential projects and building permits track permits issued. Housing starts rose 5.8% in December, reaching their highest level in 14 years. Month-over-month, housing starts climbed to a seasonally adjusted rate of 1.67 million, while building permits rose 4.5% to reach a seasonally adjusted rate of 1.71 million. Year-over-year, housing starts increased 5% and building permits were up 17%. Similar to previous months, construction on single-family homes was the major contributor to the rise in both housing starts and building permits. Month-over-month, single-family starts grew by 12%.
Existing home sales or resales track the sales of previously constructed homes and make up approximately 90% of residential real estate transactions. Existing home sales jumped 0.7% in December, to reach a seasonally adjusted annual rate of 6.76 million. Year-over-year, sales were up 22.2%.
As more and more people return to work, the economy will likely continue to recover from COVID-19. Right now, housing experts are predicting a very strong year for home sales and the real estate market in general. If you would like to learn more about the benefits of buying now, let us know and we would be happy to schedule a call or virtual visit.