New data from the Census Bureau and the Department of Housing and Urban Development revealed that construction of new homes fell by 11.3% in the month of August. This is the lowest it has been since 2020.
House. by Veronica Silveri on Scribd
Builder confidence also fell five points in September from the previous month. This is the lowest it has been since April, according to the National Association of Home Builders (NAHB)/Wells Fargo Real Estate Market Index.
Mortgages go up, demand goes down
The NAHB pointed out how constant interest rate increases have had an impact on the market. Alicia Huey, chairman of the Association, stated that "High mortgage rates above 7% combined with low resale inventory and higher home prices are slowing housing production, as many first-time home buyers and younger households are struggling to purchase an affordable home.”
This phenomenon is reflected in the drop in demand for mortgage applications, which reached its lowest level since 1996. This was reflected in another report from the Mortgage Bankers Association (MBA). Joel Kan, vice president and deputy chief economist of the MBA, said in a statement that falling rates aren't enough to rebuild the mortgage market:
Mortgage applications declined to the lowest level since December 1996, despite a drop in mortgage rates. Both purchase and refinance requests fell.
Kan revealed that the purchase index also hit its lowest level in 28 years "as prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates." Compared to last week, the index also decreased by 5%.
