CNBC: Home Builder Expectations Rise as Mortgage Applications Fall

Despite home builder sentiment reaching its second-highest level since the recession, the number of mortgage applications for newly built homes experienced its first annual drop this year.

Home builders across the U.S. are expecting sales to be stronger in the months and years ahead. But mortgage applications for new homes aren’t supporting that positive expectation.

According to a recent article in CNBC, home builder sentiment rose two points in May to the second-highest level that it’s seen since the recession. Sentiment currently stands at 70 on a monthly index from the National Association of Home Builders, where anything above 50 is considered positive.

NAHB Chairman Granger MacDonald told CNBC in an interview, “This report shows that builders’ optimism in the housing market is solidifying, even as they deal with higher building material costs and shortages of lots and labor.”

Despite that positive outlook for the future of the home building industry, the number of mortgage applications to purchase a new home fell 4.3 percent in April when compared to the same month last year. The Mortgage Bankers Association notes that this is the first annual drop so far this year, meaning that single-family housing starts aren’t seeing strong gains.

“A relatively strong March may have pulled forward some applicators from April, exacerbating the normal seasonal fall-off,” said Lynn Fisher, MBA’ vice president of research and economics an in interview with CNBC. “On net, year-to-date applications for new homes are running about three percent above the same period from 2016. Despite steady demand for housing, home builders continue to face rising costs for labor and materials, which will continue to moderate the pace of building.”

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