Over the final week of the year, light trading volume caused a little intraday volatility, but overall it was a relatively quiet week. Mortgage rates recovered some of their recent losses and ended the week a little lower.
Wednesday’s data on contracts signed in November to buy previously owned homes fell a little from October. Some investors are concerned that this reflects the effect of higher mortgage rates since the election. Others, however, feel that the uncertainty surrounding the election simply distracted homebuyers temporarily.
In either case, there are many reasons to be optimistic about continued improvement in the housing market in 2017. Even with the recent rise, mortgage rates are only a little higher than they were at the start of 2016 and are still very low by historical standards. In addition, there are reasons to expect an increase in the number of homes available for sale. According to the National Association of Home Builders, home builder confidence is ending the year at the highest level in over a decade. The most recent reading on single-family housing starts was at a multi-year high.
Another good sign for the housing market is that overall economic activity is ending the year on a strong note. Unemployment is low, wages are rising, and the stock market is at a record high. The consumer confidence index in December jumped to the highest level since 2001. Confident consumers are a key component of a healthy housing market.