Housing starts reach near-record levels in august: ARM rates and resales dip slightlyMortgagePress.comSingle-family housing
Single-family housing starts rose 0.4 percent in August to a
near-record 1.667 million units on a seasonally-adjusted annual
basis, according to figures released by the Commerce Department.
Compared to the same period in 2003, housing starts are up 11.6
percent.
"I do not know when we are going to learn. We repeatedly
underestimate the vigor and resilience of housing demand," said
Greenwich Capital analyst, Steve Stanley. "In August, we believed
that there was underlying strength, but suspect that the weather
might have caused a temporary slowing in groundbreaking. As it
turns out, neither wind, nor rain nor flooding can keep the
homebuilder from completing his or her appointed rounds."
Sales of existing single-family homes dipped 2.7 percent as
higher mortgage rates from early in the summer took a little steam
out of the resale market. The National Association of Realtors
reported that existing-home sales fell from a seasonally adjusted
annual rate of 6.72 million in July to 6.54 million in August.
However, housing sales were still seven percent above the 2003
pace. According to NAR chief economist David Lereah, the August
sales decline reflected mortgage commitment rates of 6.2 percent in
May and June, and predicted that the easing of interest rates to
below 6 percent would cause a spike in sales. Lereah's analysis was
confirmed by the results of Freddie Mac's Primary Mortgage Market
Survey, in which the 30-year, fixed-rate mortgage (FRM) averaged
5.7 percent, with an average 0.7 points, for the week that ended
Sept. 23, down from the previous week, when it averaged 5.75
percent. During the same period last year, the 30-year FRM averaged
6.01 percent.
"This new millennium has proven to be very homeowner friendly,"
said Freddie Mac vice president and chief economist Frank Nothaft.
"For instance, in the last four years we have set records in
housing starts, housing sales, low mortgage rates, refinancing
volumes and total mortgage originations. As a matter of fact, low
mortgage rates in August led to housing starts in that month that
were the second highest in over two decades."
The average for the 15-year FRM during the week ending Sept. 23
was 5.1 percent, with an average 0.7 points, also down from the
previous week when it averaged 5.13 percent. Last year, the 15-year
FRM averaged 5.3 percent.
One-year Treasury-indexed adjustable-rate mortgages (ARMs)
averaged four percent during the week ending Sept. 23, with an
average 0.7 point, down from the previous week, when it averaged
4.03 percent. At this time last year, the one-year ARM averaged
3.81 percent. "Our Primary Mortgage Market Survey results this week
show mortgage rates slipping again, which will all but guarantee
that the housing industry will continue at its robust pace and set
yet again, another record for both new construction and overall
home sales," said Nothaft.
