Homebuyers Still Endure Considerable Barriers Despite a Jump in New Inventory
- New home listings elevate, but dynamics tell a different story. In the month of October, the number of new homes available for purchase soared to a height last witnessed in late 2008 as the market adjusted to the housing bubble.
- Shortfall of move-in-ready homes has a ripple. As the majority of new homes on the market are still under construction or not yet started, the rise in inventory is not meeting strong demand.
- Rising mortgage rates add another hurdle for first-time buyers. The 30-year mortgage rate exceeded 3 percent in October, which had not occurred in the previous five months.
- Building materials get more expensive after a flattening. The construction cost index jumped in the month of November, a significant change following a three-month period of stability from August through October.
- Single-family starts taper but may rise in the coming months. Residential construction starts in the month of October declined 12 percent relative to the March peak, including an even larger drop within the single-family segment.
* Through October
Sources: Marcus & Millichap Research Services; Capital Economics; Freddie Mac; Moody’s Analytics; Mortgage Bankers Association; National Association of Home Builders; National Association of Realtors; RealPage, Inc.; U.S. Bureau of Labor Statistics; U.S. Census Bureau; Wells Fargo