New Home Construction Keeps Sinking As Housing Market Demand 'Quickly' Dries Up

Abstract

New Home Construction Keeps Sinking As Housing Market Demand 'Quickly' Dries Up Topline New housing starts unexpectedly plunged more than economists projected in June as home builders grappled with the effects of rising interest rates curbing demand for new homes, according to data released Tuesday, adding to signs of an abrupt turnaround in the booming housing market. Plummeting mortgage applications suggest construction of single-family homes could plummet another ... [ ] 20% in the next few months, one expert predicts. The latest data comes one day after the National Association of Home Builders reported the second-worst single-month drop in home builder confidence on record, driven by ongoing production bottlenecks and high inflation that have pushed the cost beyond its market value in some cases. Key Background Historically high savings rates and government stimulus measures helped ignite a home buying frenzy during the pandemic, but signs of a slowdown have quickly emerged as the Fed embarks on its most aggressive interest-rate-hiking cycle in two decades to curb high inflation. On Friday, real estate brokerage Redfin reported the number of homes for sale nationwide saw its first annual increase since July 2019 last month. Crucial Quote "Home builders need to adjust rapidly to a world with fewer buyers and much more competition from private sellers of existing homes, whose listings jumped by a third in the three months to May-with much more coming," says Shepherdson. On Wednesday, the National Association of Realtors publishes monthly data on existing home sales, and next Tuesday, S&P releases data on home prices.