By Alejandro Lazo | 22 September 2010
Construction of newly built homes jumped a surprising 10.5% in August from July, the government said Tuesday, though most of the increase came from the volatile apartment building sector. Housing sales and new construction have struggled in recent months with the expiration of a popular tax credit for buyers, and most economists predict weakness for housing this year. The number of new permits filed for construction, another closely watched indicator of building activity, was up 1.8% in August over July, the Commerce Department said.
"It is hard to get too excited," said Paul Dales, U.S. economist for Toronto-based Capital Economics. "Homebuilding activity remains at an astoundingly weak level". August housing starts were at a seasonally adjusted annual rate of 598,000 units, the second consecutive rise in the pace of new building starts since June. The estimate puts starts at 2.2% above the August 2009 rate.
Most of the increase came from buildings with five units or more. Single-family-housing starts in August were at a rate of 438,000 units, a 4.3% increase from July. Dales noted that the rise in overall housing starts is still 12% below April's 679,000-unit pace, when new construction was being influenced by the buying spree brought on by the federal tax credit.
Sales of previously owned homes have also stumbled since the tax credit's expiration. The National Assn. of Realtors will report August figures for previously owned homes on Wednesday. Ian Shepherdson, chief U.S. economist for High Frequency Economics, said the construction numbers indicate that the plunge in sales is likely to begin abating.
Mortgage Applications Decrease In Latest Mba Weekly Survey
By MBA | 22 September 2010
WASHINGTON, D.C. (September 22, 2010)— The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending September 17, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 1.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 22.9 percent compared with the previous week, which included the Labor Day holiday.
The Refinance Index decreased 0.9 percent from the previous week, which is the third straight weekly decrease. The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier. The unadjusted Purchase Index increased 18.9 percent compared with the previous week and was 38.0 percent lower than the same week one year ago.
The four week moving average for the seasonally adjusted Market Index is down 2.3 percent. The four week moving average is up 1.0 percent for the seasonally adjusted Purchase Index, while this average is down 3.0 percent for the Refinance Index. The refinance share of mortgage activity increased to 81.1 percent of total applications from 80.5 percent the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 5.9 percent from 6.2 percent of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.44 percent from 4.47 percent, with points decreasing to 0.81 from 1.08 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.88 percent from 3.96 percent, with points decreasing to 0.86 from 1.03 (including the origination fee) for 80 percent LTV loans. The contract 15-year rate is the lowest recorded in the survey, matching the rate from the week ending August 27, 2010. The effective rate also decreased from last week. The average contract interest rate for one-year ARMs increased to 6.96 percent from 6.89 percent, with points decreasing to 0.21 from 0.23 (including the origination fee) for 80 percent LTV loans.
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