Amid the recent release of some reasonably good economic data, housing data disappointed as starts, permits, and mortgage demand all fell. There was an improvement in purchase applications, but unfortunately, it couldn’t be outweighed by the drop in refinance applications.

Inventory, especially new home inventory, continues to be an issue. Fannie Mae stated that in March, “total housing starts fell for the sixth time in seven months, declining to the lowest level in almost two years.” Single-family starts have fallen after a recent January high and are at the lowest level since September 2016. And single-family permits, which have been trending downward, declined to the lowest level since late summer 2017.

Home builders see the need, but “affordability concerns stemming from a chronic shortage of construction workers and buildable lots” have them hesitant to build much needed entry level housing, according to The National Association of Home Builders.

Fannie Mae says that home builders’ confidence in the single-family market stagnated in April, as the National Association of Home Builders/Wells Fargo Housing Market Index showed little positive change in home builder sentiment after being flat the prior month. Builder sentiment about the market dropped at the end of 2018 and has only recovered about half the declines so far this year.

The lack of inventory is what might limit sales this spring. Mortgages rates have dropped from highs and are very favorable even as they tick back up slightly. Potential homebuyers are willing to take that mortgage if and when they find something to buy.