Home Builder Confidence Falls to Lowest Level in Two Years as Demand Softens Nationwide
You can track the Twin Cities housing market data. You can track mortgage rates here. You can track homebuilder confidence here.
Home Builder Confidence: In November, home builder confidence nationwide fell 12% to 60 which is a two-year low. That is the largest decline in homebuilder confidence since February 2014. Aside from February of 2014, the only other time that home builder confidence has fallen that significantly in a single month was in October of 2001, due to the attacks of 9/11. (source) (chart)
While anything above 50 is still considered a positive rating, the market has been showing signs of stretched affordability and the dynamic of pinnacle home prices combined with rising mortgage rates has begun to create some uncertainty among the home-building community.
Mortgage Rates: Mortgage rates continued upward volatility in October with the average for a 30-year fixed conventional mortgage ranging from 4.7% to 4.9%. In November that upward volatility continued as that rate hit a new 7-year high two weeks ago of 4.95% but then pulled back last week to 4.81%.
As of their last meeting, The Federal Reserve remained committed to another rate hike in December and continued liquidation of their bond position. So long as the Federal Reserve remains committed to tightening while the U.S. government continues to borrow to finance deficit spending, I expect this upward pressure on long-term interest rates to continue.
Closed Sales: Closed sales were up a marginal 2% month over month with 5,265 closings in October but were still down more than 20% from August. That is up 4% year over year and up 13% from five years ago.
New Listings: As expected, new listings were down another 12% in October with 6,012 listings hitting the market. That is a 9% increase year over year and down 3% from five years ago.
Homes for Sale: The home inventory level finally fell in October after a 9-month incline. We ended October with 11,785 homes for sale. That is down 9% month-over-month but up 2% year-over-year. Overall inventory is still down 30% from five years ago.
The Median Home Price: The median home price in the Twin Cities was up a marginal 1% month over month in October but remained in a downward trend from August. That is up 8% year over year and up 36% from five years ago.
Pending Sales: Pending sales, are a leading indicator for future closings and have been predictably in decline since May due to the seasonal downturn in market activity. In October, 4,771 homes came under contract which is down 1% month over month, down 1% year over year, and up 10% from 5 years ago.
While anything above 50 is still considered a positive rating, the market has been showing signs of stretched affordability and the dynamic of pinnacle home prices combined with rising mortgage rates has begun to create some uncertainty among the home-building community.
Mortgage Rates: Mortgage rates continued upward volatility in October with the average for a 30-year fixed conventional mortgage ranging from 4.7% to 4.9%. In November that upward volatility continued as that rate hit a new 7-year high two weeks ago of 4.95% but then pulled back last week to 4.81%.
As of their last meeting, The Federal Reserve remained committed to another rate hike in December and continued liquidation of their bond position. So long as the Federal Reserve remains committed to tightening while the U.S. government continues to borrow to finance deficit spending, I expect this upward pressure on long-term interest rates to continue.
Closed Sales: Closed sales were up a marginal 2% month over month with 5,265 closings in October but were still down more than 20% from August. That is up 4% year over year and up 13% from five years ago.
New Listings: As expected, new listings were down another 12% in October with 6,012 listings hitting the market. That is a 9% increase year over year and down 3% from five years ago.
Homes for Sale: The home inventory level finally fell in October after a 9-month incline. We ended October with 11,785 homes for sale. That is down 9% month-over-month but up 2% year-over-year. Overall inventory is still down 30% from five years ago.
The Median Home Price: The median home price in the Twin Cities was up a marginal 1% month over month in October but remained in a downward trend from August. That is up 8% year over year and up 36% from five years ago.
Pending Sales: Pending sales, are a leading indicator for future closings and have been predictably in decline since May due to the seasonal downturn in market activity. In October, 4,771 homes came under contract which is down 1% month over month, down 1% year over year, and up 10% from 5 years ago.
