171-300x225In this week’s Mortgage Market Update, we’ll take a look at where mortgage rates are currently trending, as well as the likelihood of them rising or falling. But first, we wanted to spread the word about the increase in home builder confidence – something that indicates the housing market is staying strong, despite increases in cost.

According to recent data from the National Association of Home Builders (NAHB), builder sentiment jumped sharply in June to the highest level of the year. Builder confidence rose five points to 59 from May’s reading on the NAHB’s Housing Market Index (HMI). 

This represents the highest reading of the HMI since September, 2014. Any reading of 50 or higher is considered positive, as it indicates that more builders feel that market conditions are good. Last June, builder sentiment stood at 49, just before moving into positive territory, where it has remained ever since.

“Builders are reporting more serious and committed buyers at their job sites and this is reflected in recent government data showing that new-home sales and single-family construction are gaining momentum.” – NAHB Chairman Tom Woods

Sales of newly built homes in April (the latest reading available) were 26 percent higher than a year ago, according to the U.S. Census, and housing starts were 9 percent higher. Builders are seeing strong demand, due to very limited supply of existing homes for sale, but the price premium on new construction has been holding some buyers back.

The median sale price of a newly built home in April was $297,300, an increase of 8.3 percent from April of 2014. Of the HMI’s three builder confidence components, current sales conditions rose seven points to 65, sales expectation for the next six months rose 6 points to 69, and buyer traffic rose five points to 44. That last component is the only one still mired in negative territory.

This Week’s Mortgage Rate Summary

Rates are currently trending higher, likely due to the MBS market moving down 8 points, and rates are currently forecast to rise more this week as global economic factors weigh in.  As for rate volatility, the risk is high right now and will probably remain that way for the rest of the week. We feel like a broken record as it pertains to volatility, but in today’s world we have volatile days with zero new information as the market continues to try to find its footing.

  • Mortgage Rates Currently Trending: HIGHER
  • 7 Day Mortgage Rate Forecast: HIGHER
  • This Week’s Potential Volatility: HIGH


What’s the Bottom Line?

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.