Homebuilders

The National Association of Home Builders/Wells Fargo gauge decreased six points to a three-month low of 50. The figure was below all estimates in a Bloomberg survey of economists.

Loans to buy newly constructed properties increased by 0.2% from June and was up 35.5% compared to the year prior, the Mortgage Bankers Association found.

But that was offset by a decrease in most other residential construction materials, the National Association of Home Builders said.

The cohort is outperforming the broader market — up more than 50% year-to-date versus the S&P 500's 18% gain. 

Nonbank brokers and lenders typically scale back after the spring homebuying season and the housing market could be particularly slow for the rest of this year.

Purchases of new single-family homes fell 2.5% to an annualized 697,000 pace after a downward revision to the prior month, government data showed Wednesday.

"I do believe you'll begin to see some improvement, or increases, in new housing as we head into the back half of the year," Chief Financial Officer Jim Peters said in an interview. "We're hearing optimistic stuff from the builders we deal with."

Rising interest rates during June worked to hold potential new homebuyers out of the market, the Mortgage Bankers Association's Builder Application Survey found.

Residential starts fell 8% last month to a 1.43 million annualized rate, according to government data released Wednesday.

The nearly 8% growth on a seasonally adjusted annualized basis is well above the historical average, according to the government-sponsored enterprise.

Even though the price of softwood lumber has climbed up by more than 7% in the last three months, it sits 21% below its level from a year ago.

The May uptick in nonbank housing-finance payrolls came almost entirely from lender hiring as loan broker numbers plateaued and construction demand persisted.

However, as it currently stands, most measures suggest "the market does not have a path to close the housing deficit in the near-term," Citigroup said. 

With new construction activity at the highest level in more than a year, the Federal Reserve Bank of Atlanta's GDPNow tracker is projecting residential investment added 0.1% to growth in gross domestic product in the second quarter.

Prospective borrowers are flocking to newly built properties as current homeowners shy away from listings due to high mortgage rates.

Applications to build increased, suggesting residential construction is on track to help fuel economic growth.

With spring selling season typically giving way to a slower summer, investors are focused on whether resilient buyer demand, solid home prices and a potential Fed pause will support further homebuilder outperformance through the end of this year.

Construction activity in smaller cities also saw a significant annual decline, according to the National Association of Home Builders.

Purchases of new single-family homes increased 4.1% to an annualized 683,000 pace last month from a downwardly revised 656,000 rate in March, government data showed Tuesday.

The Mortgage Bankers Association sees the likelihood of a rise in sales activity later this year based on recent construction trends, in a turnaround from the 2022 market.