Housing Starts for October came in last week down 10.6%. But single-family starts dropped only 6.8% and are still 33.3% higher than their January/February lows. New building permits were off only 4.0% overall and were basically unchanged for single-family units. Builders were obviously cautious, not knowing that the homebuyer tax credit would get extended and expanded. They also experienced the nation’s wettest month since 1928 and the second coldest October since 1925. October also begins the winter drop in overall construction.
Fannie Mae’s housing forecast projected New and Existing Home Sales will be UP 11% next year, with prices flat but stable nationally. They see Existing Home Sales UP 10% (5.46 million), and New Home Sales UP a whopping 24% (498,000) for 2010. The report unequivocally states: “It appears that the economic recovery is here.” In fact, the 23.3% boost in the annualized rate of home sales in Q3 was the largest in over twenty years. The analysis also noted that new-home inventories have dropped steadily since May 2007 and are now at their lowest levels since 1982.
Talk has begun about a coming rise in mortgage rates. They’ve been at historically low levels because the Fed’s trillion dollar buying program kept mortgage bond prices up and mortgage rates down. This program will end March 31 next year. Analysts are projecting 30-year fixed rate mortgages will then go closer to 6%. This is still a great rate historically, although it does cut into a buyer’s purchasing power. There is no question that potential buyers and refinancers should not wait around too long!