True Stories: Hybrid, eNote and RON Implementation

Join expert panelists that will discuss the status of federal legislation, trends in digital adoption and how best to prepare your organization for the next generation of lending processes.

Logan Mohtashami talks jobs report, mortgage forbearance

Lead Analyst Logan Mohtashami discusses his recent article on the latest jobs report and the most likely impact on the housing market and mortgage forbearance.

UWM has a plan to win a war of mortgage attrition

UWM's margins will fall all the way down to 75 to 110 bps. Mat Ishbia says it's the perfect environment to prove that his mortgage firm is truly elite.

Lunch & Learn about underserved markets and affordable housing

Experts in this discussion will focus on how the mortgage industry is working to right previous wrongs and champion a housing market that serves all.

Politics & MoneyReal EstateMortgage

New home sales battle: mortgage rates vs. lumber supply

New home sales get impacted much more than existing home sales by rate movements

HW+ pile of lumber

Today the Census Bureau reported that in March 2021, new home sales were at a seasonally adjusted annual rate of 1,021,000. This number beats estimates.

Additionally, major positive revisions were made to the sales number of the previous months. I expect this month’s headline to be revised lower a tad next month, but even considering that, this report was the best new home sales report in over a decade. The headline number was solid, the revisions were all positive, and the monthly supply on a three-month average is below 4.3 months. 

New home sales get impacted much more than existing home sales by movements in mortgage rates. Mortgage rates from 4.75% to 5% created a supply spike in 2018. At that time, we worked from the weakest new home sales and housing starts recovery ever, and sales were not high, historically speaking. My forecast for the bond market was that it would fall in 2019, and if world growth slowed down, the 10-year yield would get below 2%. This would drive mortgage rates much lower than the 5% levels of 2018. 

As you can see below, today’s monthly supply looks much different from what it did at the start of 2020. Demand is better now than any time from 2008-2019. During that period, we never had a monthly supply below 4.3 months with rising sales.

The most critical housing data line to follow in this housing market is the trend in monthly supply for the new home sales market. When the monthly supply is 4.3 months, and below, builder confidence is high. When supply is between 4.4 to 6.4 months, builder confidence is just meh for new construction. As long as new home sales can grow, construction can happen.

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