Mortgage Watch | October 21, 2019

Dipping interest rates help single family home permits surge ahead of predictions

It’s a numbers game, but it’s one everyone in the real estate and the home building industry watches. While construction of new houses fell more than 9% in September, there is a now a backlog of permits suggesting the dip is simply a brief pause in a real estate market reinvigorated by lower mortgage rates, according to Realtor’s Jacob Passy.

He adds that housing starts slid to an annual rate of 1.26 million last month from a revised 1.39 million in August, the government said Thursday, concentrated in new buildings with five units or more that typically get rented. Even though the number of permits to build fell slightly month-to-month, the number of permits filed was nearly 8% higher compared to a year earlier.

Construction of apartments, condo complexes, and other projects with five units or more have the potential to swing sharply from month to month. But new construction on single-family homes (about 75% of all homes sold) rose slightly to an annual rate of 918,000, marking the highest level since the start of 2019. Single-family starts have risen for four months in a row and are 2.8% higher compared to a year ago.

Passy says indicators illustrate that construction has perked up following a steep decline in interest rates, even though builders still are not producing enough new homes to satisfy demand.

Home-builder sentiment surged to a 20-month high of 71 in October from 68 in the prior month, the National Association of Home Builders said Wednesday. Readings over 50 are a sign that confidence is improving. Just 10 months ago, the index stood at a 3½-year low of 56.

Source: Realtor, MarketWatch, TBWS

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning. Last week the MBS market worsened by -7bps. This caused rates to move sideways on low volatility for the week.



About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 46 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and sons Matt and Jeff, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 26 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, paper shredding and e-waste recycling event, an Easter egg hunt, & a Meet Santa Event.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.