May 10, 2017
As the market for existing homes continues to trend toward sellers thanks to low inventory, new construction may be increasingly attractive to buyers.
At least that’s the latest dynamic hinted at in Commerce Department figures released late last month. The Associated Press reports that new home sales leapt by 5.8 percent in April, the strongest figure seen since last summer.
It is a trend that could augur well for the economy as a whole since new home construction creates follow-on ripples for the nation’s employment picture. The numbers haven’t moved evenly however. Here in the Midwest, they actually retreated a bit while rising in the South and showing the biggest gains in the Northeast and West.
The biggest factor may be the overall lack of existing housing stock on the market which is at near-historic lows. Meanwhile, mortgage rates aren’t climbing as much as some suspected they might. The average 30-year fixed-rate loan eased downward to just under four percent which may contribute to stronger demand.
According to the AP, the damper on mortgage rates could have to do with the increasing probability of potential gridlock in Washington over tax reform. Prospects for the legislative package remain murky and the deficits it might entail may spur inflation and finally buoy interest rates.