Last week’s economic reports included readings from the National Association of Home Builders on housing market conditions, housing starts and building permits issued. Consumer sentiment was reported along with weekly readings on mortgage rates and new jobless claims.

NAHB: Builder Confidence Rises in May, Housing Starts Increase in April

The National Association of Home Builders Housing Market Index posted its highest reading in seven months in May as headwinds facing home construction waned. Lower mortgage rates were a positive sign. May’s reading rose three points to 66; component readings also rose.

The index of builder confidence in current housing market conditions rose three points to an index reading of 72; the reading for builder confidence in housing market conditions in the next six months rose one point to 72 and the confidence reading for buyer traffic in new housing developments rose two points to 49. The reading for buyer traffic seldom exceeds 50. A reading of 50 or above indicates positive builder sentiment.

Commerce Department reports for April showed higher readings for housing starts and building permits issued. 1.235 million housing starts were reported at a seasonally-adjusted annual pace. Analysts expected 1.209 million starts based on March reading of 1.16 million starts. Housing starts were six percent higher as compared to March, but remained lower year-over-year. Building permits reported in April rose from 1.288 million permits issued on a seasonally-adjusted annual basis in March to 1.296 million permits in April. 

Mortgage Rates, Mixed New Jobless Claims Fall

Freddie Mac reported lower fixed mortgage rates were lower last week, but the average rate for 5/1 adjustable mortgages rose. Rates for 30-year fixed rate mortgages averaged 4.07 percent and were three basis points lower. Rates for a 15-year fixed rate mortgage averaged 3.53 percent and were four basis points lower.

The average rate for 5/1 adjustable rate mortgages rose three basis points to 3.66 percent. Discount points averaged 0.50 percent for 30-year fixed rate mortgages and 0.40 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.

First-time jobless claims were lower last week with 212,000 claims filed as compared to expectations of 217,000 new claims filed and the prior week’s reading of 228,000 initial claims filed. Analysts said that the drop in first-time claims was a sign of economic strength and job markets.

Consumer sentiment hit a 15-year high according to the University of Michigan’s Consumer Sentiment

Index. reported an index reading of 102.40 in May; analysts expected a reading of 97.10 based on April’s reading of 97.20. Low unemployment fueled consumer sentiment, but analysts emphasized that consumers were surveyed before higher tariffs on China were announced; the costs of tariffs will be passed on to consumers, which is expected to dampen consumer sentiment.

What‘s Ahead

This week’s scheduled economic news includes readings on sales of new and pre-owned homes and minutes of the Fed’s FOMC Committee meeting. Weekly readings on mortgage rates and new jobless claims will also be released.