Last week’s economic reports included readings from the National Association of Home Builders, Commerce Department reports on housing starts and building permits issued. Sales of pre-owned homes were reported along with weekly readings on mortgage rates and new jobless claims.
Builder Confidence Slips as Trade Wars Boost Lumber Prices
According to the National Association of Home Builders, home builder confidence in current market conditions was down two points to 68 as compared to May’s index reading of 70. Analysts said that rising lumber prices impacted builder sentiment and have replaced labor costs as builders’ primary expense.
Increased building costs were cited as a concern for builders despite high demand for homes and limited homes for sale. Rising materials costs were attributed to trade wars caused by recent tariffs on lumber.
NAHB said that three components of the Home Builders Housing Market Index were also lower in June. Builder confidence in current market conditions slipped one point to an index reading of 75; builder confidence in market conditions within the next six months also dropped one point to 76.
Builder confidence in buyer traffic in new housing developments dipped one point to 50. Any reading over 50 indicates more builders than fewer were confident about housing market conditions.
Housing Starts Hit 11-Year High in May
May housing starts surpassed April’s reading of 1.280 million starts on a seasonally-adjusted annual basis. May’s reading of 1.350 million starts also surpassed expectations of 1.300 million starts. Higher volume and faster pace of building homes was good news for real estate and mortgage industry pros, as building more homes is the only way to relieve marked shortages of available homes in many areas.
Rising materials costs could dampen construction pace as tariffs and resulting trade wars increase. May’s reading for housing starts was the highest since 2007 and was 20.00 percent higher year-over-year.
Building permits issued in May were 4.60 percent lower than April’s reading. Building permits were issued at a pace of 1.301 million permits on a seasonally-adjusted annual basis.
Sales of Pre-Owned Homes Slip as Supply Tightens
Previously owned homes sold at a slower pace