3/18/21: EconUpdate by P. Duffy

EconUpdate by P. Duffy

Housing starts drop 10.3 percent in February and 9.3 percent year-on-year

What does this mean?  The deep freeze in Texas and other states depressed housing starts during the month, but demand remains strong and inventories lean.

Privately-owned housing starts in February were at a seasonally adjusted annual rate of 1,421,000. This is 10.3
percent below the revised January estimate of 1,584,000 and is 9.3 percent below the February 2020 rate of 1,567,000.


Building permits fall 10.8 percent in February but up 17.0 percent year-on-year

What doe this mean?  While poor weather prompted builders to postpone pulling more permits during the month, they’re still up sharply from 2020.

Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate
of 1,682,000. This is 10.8 percent below the revised January rate of 1,886,000, but is 17.0 percent
above the February 2020 rate of 1,438,000.


New home mortgage applications fall 9 percent in February, but up 9.2 percent year-on-year

What does this mean? A combination of challenging weather, higher input costs and fewer lots slowed both housing production and sales, but larger homes remain in high demand.

Mortgage applications for new home purchases in February increased 9.2 percent compared from a year ago. Compared
to January 2021, applications decreased by 9 percent. The average loan size rose to a record high of over $370,000, and
the conventional share of applications also hit a new high.


Purchase loan apps up 2 percent from previous week and 5 percent year-on-year

What does this mean? While rising mortgage rates have put a serious dent in refinancing activity, demand for purchase loans remains solid.

The Market Composite Index for mortgage apps decreased 2.2 percent on a seasonally adjusted basis from one week earlier, with purchase loans rising 2 percent (and up 5 percent year-on-year) and refinance activity falling 4 percent (and down 39 percent year-on-year). The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.28 percent from 3.26 percent.

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