Posted About Eight Years Ago
Growing Demand Will Support Expansion in New Home Sales
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The Federal Reserve held short-term interest rates constant last month, as expected, but the next rate hike is likely not far away. NAHB predicts rates will rise at the Federal Open Market Committee's upcoming meeting in December, one year after the first rate increase of this cycle occurred.Despite these expected increases, mortgage rates should remain relatively low throughout the next few years, supporting continued growth in the demand for housing.
Unlike the recent slowing of existing home sales, new home sales should continue to expand. August recorded the second-highest annual rate of new, single-family home sales since the end of the recession. And the low inventory—currently at just a 4.6 months' supply—points to an uptick in construction ahead, consistent with the growing amount of confidence among builders.
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Economic Conditions
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Recent drops in both single-family and home improvement spending overshadowed record-breaking gains for multifamily construction.
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Effective Rate on New Home Loans Continues to Drop
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August marked the seventh consecutive month of falling interest rates.
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Latest figures from the Bureau of Economic Anaysis indicate overall economic growth is accelerating.
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Housing's Share of GDP Holds Steady
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But for the first time in more than two years, residential fixed investment had a negative effect.
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