Orion is intimately involved with helping our brokers help your clients finance the purchase of, or later the refinance of, their home. And so, we are very aware of sales activity in not only each market we serve, but also at a national level. There was news last week that caught Orion’s attention, namely the housing starts and building permits information provided by the U.S. Census Bureau.

The numbers showed that single-family housing starts rose 2.7 percent in March to a seasonally adjusted annualized rate (SAAR) of 861,000. This puts first quarter construction moderately above most forecasts as demand for housing proves to be more resilient than “the experts” had previously expected.

Orion’s brokers know that the numbers show that the supply of existing homes remains constrained both because of a decade of underbuilding following the Great Financial Crisis and, more recently, the lock-in effect discouraging current homeowners from listing their homes for sale and giving up their low mortgage rate. Our brokers helped many of those with low rates!

Real estate agents tell brokers that there is an extremely limited supply of existing homesfor sale, so many homebuyers are turning to new homes. Fortunately, this coincides with lower building materials costs compared to a year ago, which allows homebuilders to offer stronger concessions and rate buy-downs while maintaining profit margins, helping your clients.

But permits for single-family homes continue to trend below starts (despite a 4.1 percent increase to a SAAR of 818,000), and permits help give economists and analysts a look into the future of actual housing starts. (Just because someone “pulls” a permit doesn’t mean the construction will actually take place.) Given the general economic nervousness, with some talking about a recession later this year, we may see a pullback in single-family construction as the year progresses.

It remains unclear how much, if at all, recent banking turmoil and tighter credit conditions impact housing. Mortgage rates have come down from their highs, which could spur some additional single-family demand. But tighter credit conditions may result in homebuilders having a harder time financing new projects, which would weigh on future construction activity, and loan level price adjustments from investors impact pricing to borrowers. Never a dull moment, and Orion remains committed to helping you help your clients!

‍

‍

‍

‍