July 17, 2020

Housing starts climbed by 17.3% in June to 1,186 thousand after climbing by 8.2% in May.  But starts plunged 26.4% in April and having fallen 19.0% in March,  Like every other economic indicator, starts have rebounded sharply in the past two months but, in this case they remain well below where they were prior to the onset of the recession.

But builders certainly expect the housing market to continue to improve.  The homebuilders confidence index for July has completed erased the recession decline.

One of the factors boosting homebuilders confidence is the fact that mortgage rates have fallen to a record low level of 3.0%.

.Building permits rose 2.1% in June to 1,241 thousand after having jumped 14.4 in May.

The virtual lock-down of the country in an effort to combat the corona virus caused a sharp contraction in home sales and construction and should trigger a 50% drop in second quarter GDP growth which we will see at the end of this month..

However, the economy continues to open up.  Construction workers return to their jobs.  Home builders have already seen traffic through their model home pick up to where it was prior to the recession.  Their confidence is high..  Mortgage rates have dipped to a record low level of 3.0%.  Applications for mortgage refinancing have been rising steadily.

.Our sense is that starts will  continue to climb and be back to their pre-recession level by the end of the year.

Stephen Slifer

NumberNomics
Charleston, SC