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Housing Market Update – November 2013

Housing Market Update – November 2013
Housing Starts, Permits & Completions

In its latest release, the Census Bureau provided three months’ worth of housing starts, permits and completion data that was previously delayed due to the temporary government shutdown last October. Preliminary numbers for November saw housing starts jump above the one million mark for the first time since March. Compared to 842,000 starts recorded in November 2012, nationwide housing starts are up an impressive 29.6 percent.

The good news extended to permits and completions. After hovering in the 900,000 range since May, preliminary numbers pegged housing permits at a just over one million. Completions also jumped above the 700,000 range for the first time since March. New housing completions are estimated at 823,000 for November.

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Builder Confidence

Confidence among builders jumped four points from November to close out 2013 at 58. The increase was the largest since the five-point rise recorded between June and July, and just shy of the year-high 59 recorded in August. Above 50 since June, the confidence index indicates builders maintained a positive outlook for market conditions throughout the majority of 2013.

Home Sales & Inventory

Also available for the first time since the October government shutdown, preliminary new home sales data shows November sales fell by 10,000 from a year-high 474,000 in October. The median sales price for new homes also came in at a near year high of $270,900. The median sales price of existing homes has held relatively steady since September.

Both the number of pending and existing home sales decreased, nearing lows last seen in December 2012. Existing home inventory increased slightly from 4.9 to 5.1 but remains below the six-month supply indicative of a balanced market. The ongoing inventory crunch contributed to rising home prices throughout the year.

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Home Prices

The Standard & Poor’s Case-Shiller index reported home prices rose a miniscule 0.2 percent between September and October. Year-over-year home prices, on the other hand, rose 13.6 percent through October. This marks the highest gain in home prices since February 2006.

Currently, average home prices remain at levels last seen in mid-2004 and are forecasted to experience single-digit growth in the coming year.

Mortgage Rates

Mortgage rates continued to trend upwards heading into the end of the year. The contract interest rate for a 30-year fixed mortgage was 4.64% as of the week ending December 20. As rates moved higher, the volume of mortgage loan applications continued a decline that began with a double-digit drop in November.

New underwriting standards in the Qualified Mortgage rule, effective with the start of the new year, are expected to restrict lending for low to moderate-income buyers in the short-term. However, the historically-low mortgage rates that drew many hopeful home owners to the market in 2013 are expected to persist at least through the beginning of 2014.

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Where are we headed? Most experts agree market growth will continue over the next year.