Building Permits Rise Amid Slow Existing Home Sales
Check out our breakdown of the current housing market and its relation to lumber markets...
While we continue to read here about slow home sales, new home sales activity as measured by newly issued building permits is more relevant to homebuilders and lumber markets.
The results in that statistic signal continued modest strength in contrast to the low level of sales of existing homes. New building permits in April were up markedly from the same month last year.
Also, this year’s application rate showed an increase of 8% over the pre-COVID month of April 2019.
The overall housing market is troubled by high interest rates, which the Federal Reserve Board has signaled are likely to drop once in 2024. Average 30-year mortgage rates were just under 7% in mid-June, according to the Federal Reserve Bank of St. Louis, which tracks voluminous data on housing. That’s down from a recent high of 7.63% in October 2023. But it is dramatically higher than its modern low of 2.96% three years ago.
The University of Michigan Survey of Consumers suggested that “buying conditions for both large durable goods and homes slid in May”. The survey tied that change in sentiment to “the negative impact of high interest rates”.
Homebuilder confidence as tracked by the NAHB/Wells Fargo Index is running at a nearly neutral rate of 49 (on a scale of 0 to 100).
