Housing starts fell 8% to a level of 1,43 million annualized, a bit below the estimates of 1,49 million. This was after a very strong May, which was revised down to 1,56 million from a previous level of 1,563 million.
The number of permits for new construction fell 3.7% from the revised 1.5 million estimate in May, which was slightly higher than the previous estimate.
The numbers together show that new homes are being built at a steady rate despite high mortgage rates and a general lack of housing available for sale.
Kelly Mangold of RCLCO Real Estate Consulting said, “Dem, and from millennials for homes is high. However, as boomers enter their retirement years, they are often moving and have significant home equity.”
Political Cartoons about the Economy
The report was released a day following the release of the National Association of Home Builders’ monthly survey, which showed that confidence among builders increased by 1 point in June. This is the seventh consecutive rise and the highest level seen since last year.
The lack of homes on the market is a benefit to new home construction since homeowners who have low mortgage rates choose not to sell their properties.
The lack of resale stock means that prospective homebuyers who are not priced out of the marketplace continue to seek new construction said NAHB chairman Alicia Huey. Huey is a custom homebuilder from Birmingham, Alabama. Builders are also concerned about rising mortgage rates, which have reached 7%, and they continue to struggle with supply-side issues, such as the scarcity of transformer equipment for electrical power and concerns over lot availability.
In fact, the Federal Reserve’s aggressive tightening has resulted in a rise in mortgage interest rates, which will make purchasing a home more expensive in 2022.
Talk of Soft Landing Resumes
Odeta Kush, the deputy chief economist of title insurer First American, said there is still a pent-up housing demand, but rising rates are putting a strain on affordability. According to Freddie Mac, the average fixed rate mortgage for a 30-year term was 6.67 percent in the week that ended June 22nd. In the week ending on July 13th, mortgage rates were at around 7 percent. “If you hold household income constant, an increase in mortgage interest rates reduces the ability to buy a home by about $10,000.”
George Ratiu is the chief economist of Keeping Current Matters, a real estate information firm. He warned that there could be headwinds for builders in the coming months.
Ratiu stated that “as we look towards the second half of 2023, it is reasonable to expect a moderate flow of new homes.” Homebuilders are still facing high construction costs due to the slowing of Canadian lumber exports. Massive timber losses in Canada due to wildfires this season are weighing heavily on markets. The price of lumber rose from $428 per thousand feet of board in mid-May to $580 this week.
Bright MLS’ Lisa Sturtevant, Chief Economist, said about Wednesday’s report: “While new housing construction won’t immediately solve the housing supply problem, the recovery of the homebuilding industry is vital for meeting housing needs in the country and easing affordability challenges for potential home buyers.”
Kelly Mangold of RCLCO Real Estate Consulting said, “Dem, and from millennials for homes is high. However, as boomers enter their retirement years, they are often moving and have significant home equity.”
Political Cartoons about the Economy
The report was released a day following the release of the National Association of Home Builders’ monthly survey, which showed that confidence among builders increased by 1 point in June. This is the seventh consecutive rise and the highest level seen since last year.
The lack of homes on the market is a benefit to new home construction since homeowners who have low mortgage rates choose not to sell their properties.
The lack of resale stock means that prospective homebuyers who are not priced out of the marketplace continue to seek new construction said NAHB chairman Alicia Huey. Huey is a custom homebuilder from Birmingham, Alabama. Builders are also concerned about rising mortgage rates, which have reached 7%, and they continue to struggle with supply-side issues, such as the scarcity of transformer equipment for electrical power and concerns over lot availability.