Single-family housing starts increased in March after a slow start to the year.
As compared to the month prior, starts increased 26,000 to reach 618,000 units started on a seasonally-adjusted annualized basis. March's reading sits below the six- and twelve-month rolling averages for the housing market metric firmly; yet, home builders appear unworried.
The abundance of low- and no-downpayment mortgages for first-time and repeat buyers; today's mortgage rates at ultra-low levels; plus, a recent surge in buyer foot traffic has kept builder confidence near its highest point since mid-last decade.
It's an excellent time to be shopping for a home.
Each month, the U.S. Census Bureau and HUD co-publish the Housing Starts report. A "housing start" is defined as a home on which construction has started; on which ground has broken.
Housing starts are broken in three categories, by property type.
Structures with five or more units are more commonly known as "apartment buildings" and are characterized by a common basement, heating system, entrance, water supply and sewage disposal.
Each apartment unit is considered a "start". An apartment building with 150 planned units, therefore, is tallied as 150 housing starts.
In March, inclusive of all three property types, the government reports that Housing Starts rose two percent from the month prior, dragged lower by a seven percent decrease in apartment building construction.
Apartment units are typically built and owned by developers as rental housing.
To individual home buyer like you and me, however, such apartment building construction is of little importance. Few U.S. home buyers build and buy 2-4 unit properties, and even fewer purchase or build entire apartment buildings of 5 units or more.
To the typical U.S. homebuyer, it's single-family housing starts what matters most.
This is because no matter where you live -- Loudoun County, Virginia; San Diego, California; or, Seattle, Washington, as examples -- home buyers purchase single-family homes with far greater frequency than they purchase other home property types.
Tracking single-family housing starts can be a more effective way to gauge the health of the new construction housing market nationwide.
Single-family housing starts rose 4 percent last month, reaching to 618,000 units on a seasonally-adjusted, annualized basis.
The increase follows a slow winter which, builders say, was affected by poor weather throughout much of the county. In the Northeast, for example, starts rose 100% between February and March, supporting the notion that "bad weather" is reflected in the Census Department figures.
As the weather warms, so is builder optimism.
According to the National Association of Homebuilders, builder confidence currently reads 56 -- the tenth straight month confidence has topped 50.
Readings over 50 are significant because when homebuilder confidence is 50 or better, it suggests "good" conditions for selling new homes.
The majority of new construction remains concentrated in southern states, however.
The South Region, which includes Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia, Alabama, Kentucky, Mississippi, Tennessee, Arkansas, Louisiana, Oklahoma, Texas, accounted for more than half of last month's U.S. single-family housing starts.
The 2015 housing market is building on last year's positive momentum. Demand for homes continues to outpace supply. This is leading home values higher; and multiple-offer situations continue to be common nationwide.
Thankfully, mortgage guidelines are loosening.
Today's home buyers have an easier time getting approved for a mortgage as compared to several years ago. Banks are reducing approval standards, lowering minimum credit score requirements, and have made it simpler to get access to low-downpayment mortgages and no-money-down loans.
FHA mortgages are easier for which to qualify, for example.
As compared to the last year, improving market condition have prompted many banks to lower their minimum credit score thresholds. Combined with a reduction in FHA MIP rates, this has put FHA loans within reach of more U.S. buyers; and, Fannie Mae and Freddie Mac continue to support their five percent downpayment mortgage programs.
VA loans and USDA loans remain popular, too. Neither requires a downpayment.
VA loans are available to eligible active-duty military personnel, veterans of the armed services, members of the national guard and reserves, and surviving spouses. VA loans offer 100% financing and require no mortgage insurance. Approval standards are flexible and mortgage rates are often lower than with comparable conventional loans.
USDA loans are also no money down.
USDA loans are backed by the U.S. Department of Agriculture and can be used in many rural and suburban areas nationwide. USDA mortgage rates are typically the lowest of all government-backed loans, and mortgage insurance rates are minuscule compared to other low-downpayment programs.
With home prices expected to rise through 2015 and into 2016, the availability of low- and no-downpayment mortgages will be a boon to U.S. buyers -- especially if mortgage rates remain low.
Mortgage rates have been on a downward trajectory since the start of last year. Lenders now quote rates in the 3s and APR is similarly low for loans of all types, including FHA, conventional, VA, and USDA.
Compare today's mortgage rates now. Rates are available online at no cost and with no obligation. No social security number is required to get started.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2015 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)