All articles tagged with #home construction
Oxford Economics predicts the U.S. housing market will continue to decline due to high mortgage rates, elevated home prices, and low inventory, with slow new construction and affordability issues persisting, but the economy is expected to avoid a recession this year.
U.S. tariffs on imported building materials, especially from China, Canada, and Mexico, are significantly increasing the costs of home construction, with estimates of over $4,000 additional per home, exacerbating the ongoing housing shortage and creating uncertainty in the industry.
The housing market is struggling with record low home sales, slow price growth, and declining construction, primarily due to economic uncertainty, high mortgage rates, and external factors like immigration enforcement impacting workforce participation, leading to a challenging environment for buyers and builders alike.
High mortgage rates averaging 6.92% in June continue to dampen builder confidence, with the NAHB/Wells Fargo Housing Market Index for single-family homes dropping to 42 in July. Despite this, builders expect mortgage rates to decrease later this year as inflation shows signs of easing. The survey also noted that 31% of builders cut home prices in July, while sales incentives remained steady. Regional HMI scores saw declines across all regions.
Experts predict a modest improvement in the 2024 housing market, with mortgage rates expected to stabilize between 6.1% and 7%, and a slight increase in home sales. The "mortgage rate lock in effect" from pandemic-era rates has kept many from selling, but recent rate declines have spurred some activity. Housing shortages will persist, but new construction could offer more options. Home price growth will vary by region, with some areas potentially seeing double-digit increases. New single-family home construction is expected to rise for the first time since 2022, while multifamily construction may decline due to tight financing conditions. Overall, the market will likely remain undersupplied, keeping prices relatively high.
Binyamin Appelbaum argues in the New York Times for a shift towards mass production of modular homes in factories, citing the need for a sequel to the failed 1969 initiative, Operation Breakthrough. Appelbaum highlights the potential benefits of standardized building materials and regulations, as well as the ability to significantly reduce construction time from eight months to a single day. He suggests that government investment and subsidies, similar to those that have driven the spread of solar panels, could revolutionize the home-building business and address issues of housing market volatility and transportation costs.
Housing starts in the US unexpectedly surged by 14.8% in November, reaching the highest level since May, as falling mortgage rates attracted consumers back into the housing market. The increase in construction activity was driven by low inventory of existing homes and favorable mortgage rates. However, applications to build fell by 2.5% in November, indicating a potential slowdown in future construction. Despite this, building permits are up by about 4.14% compared to the same period last year.
The annual pace of new home construction in the US surged in November, rising for the third consecutive month, driven by falling mortgage rates and a shortage of housing inventory. Housing starts jumped by 14.8% compared to the previous month, reaching the highest level since May. Single-family building activity was the main driver, with a 40% increase in new single-family homes under construction compared to a year ago. However, building permits ticked down by 2.5% in November. Despite the increase in construction, there is still a significant housing shortfall, leading to rising rents and home prices. Lower mortgage rates are expected to continue to boost affordability and meet pent-up demand, as existing homeowners are reluctant to sell due to their ultra-low mortgage rates.
Joe Green, a US veteran, and his fiancée, Gift Prakaew, left city life in Bangkok to build their dream home in a seaside town in Central Thailand. After retiring, Green wanted a change of scenery and found Thailand to be an affordable and appealing option. They purchased a plot of land under Prakaew's name and worked with a builder and architect to construct their three-bedroom, 2,000 square feet home. The couple's modern, one-story house, with a white, grey, and black color scheme, cost $188,000 to build and turned out exactly as they envisioned.
Despite a spike in mortgage rates, housing starts in the US rebounded by 7% in September to an annual rate of 1.35 million units, according to Commerce Department data. However, applications to build fell by 4.4% over the month, indicating a decline in future construction. Building permits are also down by 7.2% compared to the same time last year. The low supply of existing homes on the market is providing a favorable backdrop for homebuilders, keeping prices elevated despite efforts by the Federal Reserve to cool the economy and suppress housing inflation. The National Association of Home Builders/Wells Fargo Housing Market Index fell to its lowest reading since January 2023, reflecting lower levels of buyer traffic and decreased housing affordability due to higher interest rates. Rates are expected to remain elevated as the Federal Reserve signals a longer period of peak interest rates.
Tyler Perry is building a brand new five-bedroom home for 93-year-old Josephine Wright, who has been embroiled in a legal battle with a land development company over her family home in South Carolina. The company had offered to buy her home, but when she refused, they harassed and threatened her, even filing a lawsuit to seize control of the property. While her fight to keep her home is ongoing, Perry has stepped in to help by constructing a new house for Wright and her grandchildren to live in.
Hurricane Idalia caused heavy damage to homes in the fishing village of Horseshoe Beach, Florida, but some residences built on stilts remained relatively unscathed. State building codes, regularly revised to withstand catastrophic weather events, played a significant role in protecting these homes. However, the debate arises between building stronger structures and considering income disparities and the preservation of local culture. The aftermath of Idalia highlights the need for improvements in building codes and the challenges faced by homeowners in raising older residences. Grants may be available for rebuilding, but stricter building codes and insurance requirements may apply. The storm may serve as a turning point in reevaluating how communities rebuild and adapt to climate change.
Connecticut is experiencing a severe shortage of houses for sale, with a decline in the construction of single-family homes. Builders attribute this to rising construction costs and financing costs tied to higher interest rates. The pandemic initially caused inventory to dwindle and prices to rise, and now rising interest rates have further discouraged homeowners from selling. The scarcity of homes has led to increased demand for apartments and higher sale prices for the few houses available. Builders are cautious about future construction due to uncertainty around interest rates, and the shortage of skilled workers and available land also pose challenges.
An Iowa family who lost their home in a tornado in 2001 has won two million dollars in the Powerball lottery. Tammy Gordy plans to use part of her winnings to finish building their home, which had been put on hold for a few years. Gordy realized she had won when she checked her lottery tickets using the mobile app. This is the first of three big lottery prizes won in Iowa in two days, with the other two prizes yet to be claimed.
Despite interest rates at a 15-year high, the US housing market is showing renewed momentum with climbing home prices and a surge in new housing construction, particularly in Southern cities. The Federal Reserve's efforts to cool down the economy and restrain the housing market have not been as effective as expected, and the market is proving difficult to curb as the labor market remains strong and consumer balance sheets are healthier than before the pandemic. However, the housing market's resurgence may limit the scope of the Fed's efforts to slow down the economy and bring inflation under control.