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State & National Updates
Eye on the Economy

Growing Demand Will Support Expansion in New Home Sales

 

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.

 

Economic Conditions

 

Single-family Construction Spending Declines

Recent drops in both single-family and home improvement spending overshadowed record-breaking gains for multifamily construction.

 

Effective Rate on New Home Loans Continues to Drop

August marked the seventh consecutive month of falling interest rates.

 

BEA Releases a Third Estimate of GDP Growth

Latest figures from the Bureau of Economic Anaysis indicate overall economic growth is accelerating.

 

Housing's Share of GDP Holds Steady 

But for the first time in more than two years, residential fixed investment had a negative effect. 

 

Market Trends

 

Construction Employment Growth by State

California, Florida and Colorado are among those with the biggest gains. 

 

Share of Plus-Sized Homes Keeps Growing

Not since 2007 have there been this many starts of new homes with more than 5,000 sq. ft.