Economic Update by P. DUFFY
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January builder confidence index drops 3 points to 83
Rising material costs led by a huge upsurge in lumber prices along with a resurgence of the coronavirus across much of the nation pushed builder confidence in the market for newly built single-family homes down three points to 83 in January. Despite the drop, builder sentiment remains at a strong level. The HMI index gauging current sales conditions dropped two points to 90, the component measuring sales expectations in the next six months fell two points to 83 and the gauge charting traffic of prospective buyers decreased five points to 68.
Purchase loan apps up 3 percent from previous week and 15 percent year-on-year
The Market Composite Index for mortgage apps decreased 1.9 percent on a seasonally adjusted basis from one week earlier, with purchase loans up 3 percent (and rising 15 percent year-on-year) and refinance activity falling 5 percent (but up 87 percent year-on-year). The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.92 percent from 2.88 percent.
Annual single-family home rent growth surged to 3.7 percent in November
U.S. single-family rent growth strengthened in November, increasing 3.7% year over year, showing solid improvement from the low of 1.4% reported for June 2020, and up from the 2.8% rate recorded for November 2019. The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time.
Industrial market finishes 2020 with record levels of absorption, but new supply expected to temper rent increases
The U.S. industrial market finished the year remarkably strong with 89.8 million square feet (msf) of net absorption, the strongest single quarter ever recorded. This brought the year-to-date (YTD) total to 268.4 msf, surpassing the 240.9 msf reported at year-end 2019 by 11.4%. Among the key drivers stimulating this level of activity was digital sales, sparking more e-commerce leasing, as well as third-party logistics providers that occupy warehouse/distribution space.