According to data published this Wednesday by the Department of Commerce, US new home construction rose 3.9% in July amid high mortgage rates.
Now housing starts at an annual rate of 1.45 million units represent more than the Refinitiv forecasts who calculated a rate of 1.44 million units.
For the head of model portfolio construction at Morgan Stanley’s Global Investment Office, Mike Loewengart, “the latest numbers suggest that easing an extremely tight housing market is no mean feat, even with mortgage rates at their highest levels in more than two decades“, said.
According to the specialist, “like the labor market, housing has continued to exhibit the ‘rigidity’ of inflation that the Fed has been trying to combat. And as the Fed itself has tried to remind markets, it’s going to be a long fight.”
Freddie Mac recently published an analysis showing that 30-year fixed mortgage rates are currently around 6.96%, that is, it remains above the rate of 5.51% registered a year ago, being the highest level since November 2022.
Alicia Huey, president of NAHB and a custom home builder and developer from Birmingham, Alabama noted that “rising mortgage rates and high construction costs stemming from a shortage of construction workersthe lack of buildable lots and the continued shortage of distribution transformers dampened builder sentiment in August,” he said.
The progressive and aggressive rise in interest rates by the Federal Reserve as a strategy to control inflation and bring it to 2% continues to put pressure on the real estate market as these actions weigh on mortgage rates that have skyrocketed above 7%, quickly alienating both homeowners and prospective buyers.
However, builders’ confidence remains despite inventory shortages as a moment of opportunity, but rising mortgage rates affect demand as well.
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Source: La Opinion
