04/16/2024
Current (April 16, 2024) Mortgage Rate Trend Direction:
Sideways to higher - trying to stabilize at key levels
National Average for 30 year fixed mortgage: 7.44% - up from 7.30% yesterday
(source: CNBC)
CoreLogic Rental Report
CoreLogic released their Rental Report for the month of February, showing that rent prices are up 3.4% year over year, which is a pretty big increase from 2.6% in the previous report and the highest year over year level in 10 months.
The latest CPI report showed that shelter costs rose by 5.7%, which is 2.3% higher than what we are actually seeing because of the lag. When you multiply that difference by the shelter weighting in Core CPI, it shows that shelter is being overstated by roughly 1%. That would mean that Core CPI should be closer to 2.8% instead of 3.8%. Doing the same exercise with the Fed’s favorite measure, PCE, and you get 2.3% instead of 2.8% being reported.
NAHB Housing Market Index
The April NAHB Housing Market Index, which measures builder confidence, remained at 51, which is the highest level in 9 months and is in expansion territory.
Here is a breakdown of the internal metrics:
Current Sales: rose 1 points to 57 (expansion)
Future Expectations: fell 2 points to 60 (expansion)
Buyer Traffic: rose 1 points to 35 (contraction, but highest level since Aug)
Future sales remained in expansion, but fell two points because of the higher mortgage rate outlook. Buyer traffic continues to slowly rise – Overall, this was a good report.
According to the NAHB 22% of builders the percent of builders cut home prices, down from 24% last month and 36% in December. The use of sales incentives ticked down to 57% in April from a reading of 60% in March. This shows that builders have a bit more pricing power and speaks to strength.
Housing Starts and Permits
Housing Starts fell almost 15% in March after a nice gain in February. The annualized pace has fallen from 1.55M units to 1.32M. Starts are now down 4.3% year over year. Single-Family Starts, which are most important, fell 12.4% to a 1.02M unit annualized pace. SF Starts are now up 21% year over year.
There were just 299,000 multi family starts, which is the lowest level since 2017 not including Covid. There is a near record high 957k multi-family units under construction, which should add some supply and ease rental pricing pressures.
Building Permits, which is the future supply, fell 4.3% to a 1.46M unit annualized pace and are now up 1.5% year over year. Single Family Permits fell almost 6% to 0.97M unit annualized pace and are up 17.4% year over year.
Completions fell 13.5% last month to a 1.47M unit annualized pace, while Single-Family fell 10.5% to a 0.95M unit pace.
Bottom line – We may see some easing in the rental market in the near term, but home prices should be well supported as there is not enough supply coming to market.
