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.