Seasonally adjusted applications to purchase homes jumped 11.7% for the week ending November 14th, a solid improvement in a series of gains following a weak trend in late October. The purchase applications index is 6.1% lower than the same time in 2013. Credit overlays and high cash shares continue to dog purchase application volumes, but regulatory clarity in the form of a final QM and QRM rules as well as overatures by the FHA and FHFA to improve clarity on lender risks should help to ameliorate some of the constriction.
The average rate for a conforming 30-year fixed rate mortgage as reported by the Mortgage Bankers Association eased to 4.18%, down slightly from last week. The average rate a year ago this week was 4.46%.
The share of both FHA and VA loans increased in this week’s survey.
Equally strong were single family housing starts and permits for construction which reached their highest levels since last October. Starts gained 4.2% on a monthly basis for the second consecutive month and were up 15.4% compared to a year earlier while permits rose 2.4% on a year-over-year basis.
Low inventories and an inventory miss-match, particularly at the entry level portion of the market, have hampered sales, particularly in non-judicial states.
Improved construction spending will help to alleviate inventory constraints as well as fuel job creation and buyer confidence as options improve.
This week’s readings suggest a solid improvement in mortgage applications and dovetails with the solid foot traffic and pending home sales figures from the last two months and point to a solid fall and winter market. Additional construction will help to ameliorate tight inventories and fuel home sales, but without dampening price growth; construction remains low on a historical basis. Consumers will benefit from employment growth and better options in the market.
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