After having a strong month of February housing construction has slowed down drastically in March with building permits are down 8.8%. In the housing market, new home construction is a bright spot as more and more people have a demand for new homes. This is a boost for home builders having that there is a shortage for existing homes.
The problem is that because of an increase in the interest rate, resale inventory as become pricy. There is also a lack of access in electrical transformer equipment making it hard for homebuilders to keep up with demand. People want homes but builders are having a hard time gathering supplies in time.
Another factor that is hurting the housing market is that everyone that bought a house during covid doesn't want to sell it. People don't want to sell because mortgage rates were about 3% during the pandemic and are now double that. Nobody is selling and this is hurting the housing market.
https://www.usnews.com/news/economy/articles/2023-04-18/new-construction-softens-in-march-with-permits-down-8-8
Are there any policies that the government can implement to make this adjustment?
ReplyDeleteI think it is understandable that homeowners who purchased their homes in recent years do not want to sell them, but this will have a significant influence on the housing market. It will be interesting to observe how the market responds to this in the long term and I believe there will be a solution.
ReplyDeleteI don't know if a specific policy implemented by the federal government will directly boost the housing market. We are in a bear market with relatively high inflation (lumber prices), high interest rates (less mortgages), and we have had a supply of homes issue for the last half decade. The demand for homes is much larger than supply.
ReplyDeleteFrom experience in the trades, I can say this has been hurting home builders and the individual trades for some time. Like Curtis said, the lumber prices have increased a lot, within a business this forces them to charge more and pay their employees less.
ReplyDeleteI wonder if this will start to effect where people live which could effect where businesses locate and what it means for income in that area.
ReplyDelete