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Housing market goes from bad to worse

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U.S. housing market continues to be hit By rising interest rates And inflation has skyrocketed, and data released this week show that things are getting worse.

Housing starts fell 14.4% in May to a 13-month low, seasonally adjusted annual rates of 1,549,000 units, and new construction permits down 7%, according to data released by the Census Bureau on Thursday. The number of households was 1,695,000.

The contractor is working in a house under construction in Antioch, California, USA, on Tuesday, June 14, 2022. (Photographer: David Paul Morris / Bloomberg via Getty Images / Getty Images)

Significantly lower than analysts expected. Economists surveyed by Refinitiv predicted that housing starts would decrease by only 1.3% and building permits would decrease by 2.1%.

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Perhaps, of course, the confidence of homebuilders is also declining.

The National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index, released Wednesday, saw builders’ confidence in the market for new single-family homes decline for the sixth straight month in June, down two points from the previous month. It showed that it became 67. NAHB said in a press release that the continued decline in builder confidence was “Troublesome signs of the housing market.. “

Homebuilder

The contractor is working in a house under construction in Antioch, California, USA, on Tuesday, June 14, 2022. (Photographer: David Paul Morris / Bloomberg via Getty Images / Getty Images)

“The housing market faces both demand and supply challenges,” said Robert Dietz, Chief Economist at NAHB.

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“The cost of housing construction materials increased by 19% year-on-year due to increased costs of various building materials, except for timber, which recently declined due to the slowdown in housing,” he said. “On the market demand side, the rise in mortgage rates in the first half of 2022 has reduced a significant number of potential homebuyers, as reflected in the decline in HMI traffic measurements.”

House

The contractor will bring a new door to a house under construction in Antioch, California, USA, on Tuesday, June 14, 2022. (Photographer: David Paul Morris / Bloomberg via Getty Images / Getty Images)

Prices are expected to continue to rise As the Federal Reserve raises interest rates To curb inflation, the highest level in 40 years.

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According to Freddie Mac’s latest data, the average interest rate on 30-year fixed-rate mortgages surged to 5.78% last week, rising more than 50 basis points from 5.23% last week, the highest increase since 1987. 5.87% level is the highest since November 2008.

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