“Builder sentiment has shown that higher mortgage rates are contributing to a decline in buyer traffic, and rates need to stabilize to prevent the housing market from slowing,” added Alicia Huey, chairman of the National Association of Home Builders (NAHB).
While the combination of high-interest rates, high pricing, and limited inventory is likely to continue to plague the housing market, First American deputy chief economist Odeta Kushi highlighted that demand remained strong, especially among millennials.
“Demographic tailwinds from millennials continuing to age into their prime home-buying years and a lack of existing-home inventory means that new-home construction is essential in meeting shelter demand,” Kushi said. “Higher mortgage rates threaten affordability, and builder supply-side challenges remain, but the housing market remains fundamentally underbuilt, and existing homeowners aren’t moving. While builders can’t make existing homeowners move, they can add more new homes to the housing stock.”
“The lack of resale inventory continues to benefit the new home market, and motivated buyers may find a good deal as prices stagnate and large builders who are able to offer mortgage buydowns are able to offer buyers a much more competitive offer than is available in the resale market,” Mangold added.
Within the overall figure, single-family starts rose 6.7% to a 983,000 seasonally adjusted annual rate – 9.5% higher than last year. The multifamily sector saw a 1.7% drop in construction, down to an annualized 460,000 pace.
Source: mpamag.com