Yahoo – August 17, 2020·3 mins read
(Reuters) – U.S. home builder confidence rose for a third straight month in August to match its highest level ever as record-low interest rates spur buyer traffic, data released on Monday showed in the latest indication the housing market is a rare bright spot in the economic crisis triggered by the coronavirus pandemic.
At the same time, however, a growing number of home owners are falling behind on their mortgages with tens of millions still out of work and growing signs that the labor market recovery is softening.
The National Association of Home Builders/Wells Fargo Housing Market Index rose 6 points to 78, matching a series record set in 1998. The median expectation among 30 economists in a Reuters poll was for a rise to 73 from July’s reading of 72.
NAHB’s measures of both current and future home sales improved.
“Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020,” said NAHB Chief Economist Robert Dietz. “Single-family construction is benefiting from low interest rates and a noticeable suburban shift in housing demand to suburbs, exurbs and rural markets as renters and buyers seek out more affordable, lower density markets.”
But even as home builder confidence surges, more homeowners affected by the crisis have stopped paying their mortgages, a separate report showed.
The delinquency rate for residential mortgages rose to 8.2% in the second quarter, up nearly 4 percentage points from the first quarter and the largest quarterly increase on record, according to the Mortgage Bankers Association.
Loans backed by the Federal Housing Administration, a program used by many first-time buyers and those with lower incomes, saw their delinquency rate jump to almost 16% – the highest since the survey began more than four decades ago.
The figures reflect the struggles faced by millions of homeowners during the crisis, including many participating in a forbearance program that allows people facing financial struggles because of the pandemic to put off their mortgage payments for up to one year. An estimated 4.2 million homeowners had loans in forbearance as of the end of June, according to the MBA.