The new home began to fall by 14% in May

The number of home starts fell for the second month in a row in May, down 14.4% from April and 3.5% from the previous year. The withdrawal was caused by the decline in single-family and multi-family new construction.

Uncertainty over rapidly changing economic conditions, such as inflation and rising Federal Reserve interest rates, has shaken sentiment in the construction industry, said Kelly Mangold of RCLCO Real Estate Consulting.

“Housing is starting to slow down in response to these factors, as well as in light of ongoing supply chain problems,” she said.

However, the labor market continues to perform strongly and Millennials are still creating families, indicating that there is probably still a delayed demand for housing, she said. But given high prices and higher mortgage rates, she added that many buyers are still hesitant to jump into the market.

“Some may take a more ‘waiting’ position until conditions are settled,” she said.

How many houses can I afford?

The sentiment of home builders fell for the sixth month in a row in June, according to the National Association of Home Builders, a clear indication of a slowdown in the market. Builders have taken a more cautious stance as rising mortgage interest rates have dampened demand, it said.

According to the Association of Mortgage Bankers, applications for new homes in May decreased by 4% compared to April and 5% from a year ago.

Demand for housing, which has already been hampered by austerity, rising house prices and extended building deadlines, has dealt another blow as mortgage rates rose above 5.5% last month, said Joel Kahn, associate vice president. of the MBA in Economic and Industrial Forecasting.

Despite a slight decline in late May, mortgage rates keep climbingforcing buyers to make difficult decisions about whether to move forward in their efforts to buy a home, said Hannah Jones, an economic data analyst at Realtor.com.

On the other hand, Jones said, accelerating house prices are showing early signs of stabilization.

“If housing completion increases, buyers will see some relief in the form of increased housing supply,” she said. “Despite lower demand for housing in the short term, the need for new construction remains urgent in order to fill the significant gap in housing supply for a decade and create a more favorable environment for buyers.

Related Posts

Leave a Reply

Your email address will not be published.