In a recent segment on CNBC’s “Global Exchange,” house line Chief analyst Logan Mohtashami and anchor Frank Holland delve into last week’s surge in mortgage application and housing approval levels.
According to the latest data Mortgage Bankers AssociationIn June 2024, new home mortgage loan applications increased by 0.7% annually.
As a result, homebuilders and developers are also more confident that interest rates will continue to fall over the next six months, leading to an increase in housing starts and permits. But Motashami pointed out that it was too early to lower interest rates to impact the market.
Meanwhile, construction labor is another issue facing the market. Recent data shows building permits for single- and multi-family homes at historic lows.
“We are worried about the construction workforce,” Motashami said. “Multifamily permits are near recession lows and single-family permits have been declining, so you’ll want to keep an eye on single-family permits when the housing starts data comes out…and look at the numbers over the past few months. Has the decline subsided.
According to recent United States Federal Reserve Data show that the number of new housing starts in June reached a seasonally adjusted annual rate of 1.353 million units, an increase of 3% from May. Inventory has also increased in recent years, with single-family home supply at 650,000 units last week, according to data altos research corp. data. Price growth should slow in the second half of 2024, and if interest rates cool, homebuyers will have more choices.
“If mortgage rates drop to 6 percent or lower, we will give Americans more choices,” Motashami said. “We are ready for lower rates if that happens, but we are not ready for lower rates in 2022 and 2023.”
Despite the growth in inventory, Motashami said affordable housing remains a “myth” in the United States. Mortgage rates and home prices need to fall before housing becomes more affordable, but if today’s inventory levels remain stable, that could be a multi-year process.