The homebuilding industry has suffered from the economic stresses of the COVID-19 pandemic. Despite strong sales, a lack of loans and high mortgage rates have created challenging conditions for home builders. Currently, the average 30-year fixed rate mortgage stands at 3.1%, well above average before the pandemic. This has resulted in limited liquidity in the construction sector and made it difficult for builders to secure affordable loans.
Despite this, the housing market is seeing a surge of activity with purchase applications up almost 25%, spurred on by record low mortgage rates. This suggests that demand for new homes is high. However, homebuilders are struggling to keep up with this demand due to the lack of available financing and high interest rates. Many builders have tried to reduce their costs by cutting features from homes, but this has met with limited success.
The National Association of Home Builders (NAHB) is now calling for the Federal Reserve and the White House to intervene to reduce mortgage rates for homebuilding. They believe this will lead to increased investment in the construction sector, enabling builders to continue their current operations and develop new projects.
The demand for new homes is growing, but the highmortgage rates required for financing is proving to be a major obstacle for home builders. The NAHB has proposed the Federal Reserve and the White House take action to bring down mortgage rates in order to make home building more affordable. This could have a positive impact on the construction sector, and help bolster the housing market.
You can read this full article at: https://www.housingwire.com/articles/homebuilders-still-need-lower-mortgage-rates/(subscription required)
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