Homebuilders

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.