Builder confidence in the market for newly-built single-family homes in the US weakened slightly in June, down two points to a level of 67 from a downwardly revised May reading of 69 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released Thursday.
Elsewhere, according to the Federal Reserve Board’s 1Q 2017 release Tuesday of its Financial Accounts of the United States report, household holdings of real estate totalled US$23.526 trillion in 1Q 2017, which is US$1.597 trillion higher than its level in 1Q 2016.
Home mortgage debt outstanding, US$9.813 trillion in 1Q 2017, rose by US$252 billion over the same four-quarter period. As the change in the total value of household-held real estate exceeded growth in mortgage debt outstanding, total home equity held by households grew.
US Builder Confidence, Home Equity: June & 1Q 2017
Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market, said the National Association of Home Builders/Wells Fargo Housing Market Index Thursday. As the housing market strengthens and more buyers enter the market, builders continue to express their frustration over an ongoing shortage of skilled labour and buildable lots that is impeding stronger growth in the single-family market.
All three HMI components posted losses in June but remain at healthy levels. The components gauging current sales conditions fell two points to 73 while the index charting sales expectations in the next six months dropped two points to 76. Meanwhile, the component measuring buyer traffic also moved down two points to 49.
US HOME EQUITY
Home mortgage debt outstanding, US$9.813 trillion in 1Q 2017, rose by US$252 billion over the same four-quarter period, said the Federal Reserve Board Tuesday. As the change in the total value of household-held real estate exceeded growth in mortgage debt outstanding, total home equity held by households grew. Over the year, total home equity held by households rose by US$1.346 trillion, 10.9 per cent, to US$13.714 trillion. Households’ home equity is now 58.3 percent of household real estate.
The share of refinancings resulting in a 5 per cent or higher loan amount has risen in recent years, and the median ratio of the new mortgage rate to the old mortgage rate has also increased from its 2013 low. However, a ratio of .81 indicates that, at the median, refinancings resulted in a 19 per cent decrease in the borrower’s mortgage rate.
In contrast, over 2006 and 2007, the last period that the majority of refinancings resulted in a new loan amount that was 5 per cent or higher than the old loan amount, the median ratio peaked at 1.10 indicating that, at the median, a refinancing resulted in a 10 per cent increase in the mortgage rate.