Housing Starts Report Mixed Bag
A key report that reflects the strength of the housing market is the monthly Housing Starts report released jointly by the U.S. Census Bureau, U.S. Department of Commerce and U.S. Department of Housing & Urban Development. The Housing Starts report includes two pieces of data: starts and permits. A housing start is counted when construction begins on a new single or multifamily property. A permit is counted when a permit is issued by a local government to a property owner or builder to begin construction on a new single or multifamily property. Because construction typically begins soon after a new permit is issued, housing starts and permits are typically highly correlated.
The Housing Starts report issued in March 2015 showed sluggish results for February 2015 after a relatively negative report for January. The January figures showed that housing starts declined 17.0% to approximately 897,000 annualized units. Driven by poor weather across much of the country, the housing starts figure came in well below industry analyst expectations. Housing starts declined across all regions, led by the Northeast Region which was down 56.6%. Single family housing starts declined 14.9% and multifamily starts declined 20.8%, reversing a 7.9% increase in January. On a more positive note, housing permits increased 3.0% to approximately 1.092 million annualized units, exceeding analyst expectations Taken together, the housing starts and permits figure paint a mixed and relatively disappointing picture of the housing market. The negative impact of an especially harsh winter cannot be ignored, however, and we will be able to get a better sense of the new housing supply market after the country thaws out in Spring. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The housing starts report continues a trend of relatively disappointing housing figures to start 2015 and suggests that anticipated new housing supply may be delayed in hitting the market. From a home buyer and mortgage borrower’s perspective, less housing supply is a negative although inventory should pick-up as the weather improves and the spring home buying season arrives. Additionally, interest rates continue to be attractive for mortgage borrowers so the housing starts report should not deter prospective home buyers from starting their home search. The first step in the home buying process is determining what size loan you can afford and getting pre-approved for your mortgage. Use the Mortgage Qualification Calculator on FREEandCLEAR to asses what size mortgage you qualify for and then use our INTEREST RATES function to contact lenders in your area and get pre-approved. FREEandCLEAR offers everything you need to be ready for the home buying season when Spring eventually arrives!
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