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US mortgage rates eased last week to their lowest level since early February, while a further decline in home-purchase applications suggested even cheaper borrowing costs may be needed to stir demand. The contract rate on a 30-year fixed mortgage slipped 5 basis points to 6.82% in the week ended July 19, according to Mortgage Bankers Association data released Wednesday. An index of mortgage applications to buy a home decreased 4% to the lowest level since the end of May. While mortgage rates remain below 7%, they’re still twice as high as they were at the end of 2021. Combined with elevated home prices, many potential homebuyers have been shuffled to the sidelines, evidenced by waning sales of previously owned houses. A National Association of Realtors measure of homebuyer affordability declined for a fourth straight month in May and stood at one of the lowest levels in the group’s data back to 1989.

WASHINGTON, DC – Home price growth in the second quarter was stronger than previously anticipated but will likely moderate soon, closing 2024 and 2025 at annual rates of 6.1% and 3.0%, respectively, according to the July 2024 commentary from the Fannie Mae Research Group (ESR). Despite a more than 30% increase in listings of homes available for sale compared to a year ago, certain indicators of housing activity remain soft. This dynamic of gradually increasing supply and affordability-constrained demand is expected to cause home prices to moderate going forward. …This contributed to the ESR Group revising downward its starts and new home sales forecasts; notably, however, it revised upward its existing home sales forecast due to a modestly lower mortgage rate path. …The ESR Group downwardly revised its inflation forecasts and now expects the CPI to end the year at 2.9% [and] now expects the Federal Reserve to cut rates in both September and December.

Existing home sales fell for the fourth straight month in June due to lingering high mortgage rates and record-high prices, according to the National Association of Realtors. Although low resale inventory continued to push prices to another record high, the months’ supply of inventory continued to increase and reached its highest level since May 2020. Improving inventory and moderating mortgage rates are likely to ease home price growth in the months ahead. Homeowners with lower mortgage rates have opted to stay put, avoiding trading in for higher rates. …Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, fell 5.4% to a seasonally adjusted annual rate of 3.89 million in June, the lowest level since December 2023 (as shown below). On a year-over-year basis, sales were also 5.4% lower than a year ago.

Stucco was the most common principal siding material for new single-family homes started in 2023 at 26.8%, according to the Census Bureau’s Survey of Construction. Stucco was followed by vinyl siding at 25.6%, fiber cement siding (such as Hardiplank) at 21.7% then by brick or brick veneer at 18.5%. Far smaller shares had wood or wood products (5.1%) and stone, rock or other stone materials (1.2%) as the principal exterior wall material. The graph shows the shares of each exterior siding since NAHB began tracking this data in 2000. The strongest trend has been the growing popularity in fiber cement siding. The share of exterior siding material for fiber cement siding has increased by five percentage points in the last ten years and by 14.2 percentage points in the past 20 years. Another major trend is the decline of vinyl siding. Although it has remained steady in recent years, this share has seen a 5.3 percentage point drop in the last ten years.

Ever since the Federal Reserve signalled that the rate-rising phase of its historic fight against inflation was over, attention has been focused on when — and how quickly — the US central bank would provide relief to American borrowers. Chair Jay Powell and his colleagues have said they need irrefutable proof that inflation is retreating to the Fed’s 2 per cent target. Until then, the Federal Open Market Committee would lack the confidence necessary to begin lowering interest rates. A string of favourable inflation data suggests that high bar has more or less been met. But the top ranks at the Fed are still hesitant to declare victory just yet. …Having more conclusive evidence in hand will be critical to assuage some officials who still harbour some scepticism that the coast is clear, especially in light of the unexpected inflation flare-up that occurred earlier this year.

WASHINGTON – The American Forest & Paper Association (AF&PA) released its June 2024 Packaging Papers Monthly report. Total packaging papers & specialty packaging shipments in June increased 7% compared to June 2023. They were up 10% when compared to the same six months of 2023. The operating rate for unbleached packaging papers was 82.9%, up 1.1 points from June 2023 and up 4.5 points year-to-date. Shipments of the biggest subgrade in bleached packaging papers – food wrapping – were 25,500 short tons for the month of June, up 6.3% from the same month last year and down 0.9% year-to-date.

NEW YORK – The average interest rate on the popular U.S. 30-year fixed-rate mortgage fell to its lowest level since mid-March this week, a welcome development for a housing market struggling to find its footing and one that may continue if the Federal Reserve cuts rates as expected in the months ahead. The 30-year fixed-rate mortgage averaged 6.77% during the week ending July 18, the lowest level since mid-March, down from 6.89% in the prior week, mortgage finance agency Freddie Mac said on Thursday. It averaged 6.78% during the same period a year ago. Data shows that homebuyers are not responding to lowering rates yet with purchase application demand remaining roughly 5% below where it was in the spring, Freddie Mac’s chief economist said.

The Conference Board Leading Economic Index® (LEI) for the U.S. declined by 0.2 percent in June 2024 to 101.1 (2016=100), following a decline of 0.4 percent in May. Over the first half of 2024, the LEI fell by 1.9 percent, a smaller decrease than its 2.9 percent contraction over the second half of last year. “The US LEI continued to trend down in June, but the contraction was smaller than in the past three months,” said Justyna Zabinska-La Monica at The Conference Board. “The decline continued to be fueled by gloomy consumer expectations, weak new orders, negative interest rate spread, and an increased number of initial claims for unemployment. However, due to the smaller month-on-month rate of decline, the LEI’s long-term growth has become less negative, pointing to a slow recovery. Taken together, June’s data suggest that economic activity is likely to continue to lose momentum in the months ahead.

CAMBRIDGE, Massachusetts  – After a modest downturn, homeowner expenditures for improvements and repairs are expected to trend up through the first half of 2025, according to the Leading Indicator of Remodeling Activity (LIRA). The LIRA projects that declines in annual spending for renovations and maintenance to owner-occupied homes will ease to just -0.5 percent through the second quarter of 2025. “Economic uncertainty and continued weakness in home sales and the sale of building materials are keeping a lid on residential remodeling, although many drivers of spending are starting to firm up again,” says Carlos Martín, Director at the Center. …“Annual spending on homeowner improvements and maintenance is expected to reach $466 billion through the second quarter of next year, on par with spending over the past four quarters,” says Abbe Will, Associate Director. “The home remodeling slowdown should continue to be relatively mild.”

The NAHB/Westlake Royal Remodeling Market Index (RMI) for the second quarter of 2024 posted a reading of 65, down one point compared to the previous quarter. The RMI remains solidly in positive territory, and NAHB continues to project that remodeling activity has stabilized at a healthy level in 2024. Although some remodelers are reporting a slowdown, most continue to see solid demand for remodeling projects. …The Current Conditions Index averaged 73, down one point from the previous quarter. …The Future Indicators Index was 58, which was down one point from the previous quarter. Quarter-over-quarter, the component measuring the current rate at which leads and inquiries are coming in decreased two points to 55 and the component measuring the backlog of remodeling jobs dropped one point to 60.